Anyone know anything about REVERSE MORTGAGING? Is it a good plan for sr. citizens on fixed incomes?

Both my mother and father have their names on the deed. If one of them die, can the bank foreclose the house or must the wait until both parties whose names are on the deed, decease?

You are asking a difficult question to answer and requires an understanding of your parent's finances that are clearly no one's business but their own, or perhaps your longer term interest.

Reverse mortgaging is not for everybody, you should seek legal advise.

i just need to know if the contract req that both decease before taking over the house.

There is a gov site some where with this info.

Also ask the loan person.

Find someone else in yr community that has dealt with this person. Ask for referrals.

the house goes to the bank at their death

Here is a very simple rule.

In any dealings between you and a bank, they win, you lose.

Reverse Mortages are terrible. Once the senior
citizen (whoever is listed on the mortgage) has
died then the heirs have to pay back the loan
or the government/loaning institution owns the
property. Just another way the corrupt bankers
and lawmakers have planned to screw you out
of everything you or your family has ever worked for.

DON'T DO IT!!!!!

Reverse mortgages have been around since about 1975.

Do a google and find the US Govt site - DO NOT GO TO A PRIVATE BANKER.

Use to be very low interest rate. You have to take a 2-4 hour informative class before you can take the loan.

It is true that your heirs will have to pay the money back. With housing value down right now it all depends on what you want to do.

The heirs do NOT forfeit the house title. It is assumed the heirs would sell the house and pay back the loan.

The house should have NO mortgage or a very very low one to make it profitable for the retiree.

You must be at least 62 years old to get a reverse mortgage.

You can pay back the interest on the loan each month if you want to but it is not required.

I got one about 5 years ago at 3.5% interest and I pay the interest back -- about $50.00 -- each month. I have used the money for emergencies. My house was valued at $185,000 at the time of my reverse mortgage and I have used about $30,000 with $150,000 of credit left.

It is really a last resort for seniors who need a last resort...it certainly equates to loss of assets to pass on to heirs but can provide crucial income. Check with a lawyer before signing, but sometimes this is what is needed.

RM's are heavily loaded with pts on the front end. The bank will take a fixed % that they determine as their fee for providing this convience to you. Heirs will still get the house but a lein will be placed upon it for the amt of the rm. This will/can be paid off with ok of the bank at closing of escrow, if the house CAN BE sold. Not so easy in this economy. If the heirs want to keep the house then the lein must be satisfied before transfer.

Uh, he will be selling YOUR POTENTIAL ASSET to the Feds for pennies...

YOU are being screwed.

My advice is to read the fine print. Any bank loan can be called, in at any time.

OMG people, Reverse Mortgages are not evil. And yes, I'm an expert since I've originated many reverse mortgages.

The bank does not get the home when the borrowers die. If there are two people on the deed, the calculations for the reverse mortgage go by the age of the youngest borrower. If one passes away, the reverse mortgage continues as normal. It does not come due!

Must be 62 or older.

The three things that determine how much a senior gets are...
1. Age
2. Current Interest Rate
3. Appraised value of the home

With a reverse mortgage a person can pull anywhere from 50% to 75% of the value of the home. That is based on their age... The older they are, the more they get, or in other words, the closer to that 75% of the value of the home they get...

They do not need to have the house paid for. But if they do, that's more money in their pocket to do with as they please.

If the reverse mortgage gives them 50k but they owe 30k. 30k of that 50k go to pay off the existing mortgage and then they have 20k left-over to do with as they please.

For a senior on a fixed income this could be a great benefit as you've just erased their monthly payment. However, they must continue to pay taxes and insurance.

When the borrowers move or die the heirs either sell the home, pay off the reverse mortgage, keep the equity and move on. Or they purchase the property. It works just like it would if it were a traditional mortgage. Except with a reverse the heirs have up to a year to determine what they want to do with the home.

See, it's simple. =)

Last Edited by King James on 09/20/2009 03:44 AM

How is he selling his potential asset to the feds for pennies?


The only major difference between a reverse mortgage and a traditional mortgage is the fact that monthly payments are not required.

And how would this be different from a traditional mortgage?

Banks don't want homes, especially in this economy. So it doesn't make any sense at all to assume that banks are doing this with the sole purpose of owning a house. If that were the case, FHA insurance wouldn't be required.

A reverse mortgage is simply a way to pull the money back out of the house without having to sell it.

Which is why money received from a RM is not looked at as income thus, it is not taxed, does not affect Medicare or Social Security.

Incorrect. It goes to whoever it is willed to at death. There is a lien on the house just as there would be if they had a current traditional mortgage. If that's the case, what would the heirs do? Well, they'd either sell the home or buy it themselves.

The control over what happens to the house is completely in the hands of the heirs, not the bank.

This is a common misconception that just a simple little effort in research would resolve.

1. Heirs do not have to pay the loan back. Lending institution can get the house or heirs can sell the house to repay the loan if they wish.

2. Not everyone wants to leave a house to their heirs. Reverse mortgages are good for people not concerned with leaving heirs their house. Why is this so hard for people to comprehend?

3. No one is "screwing you" out of your home. In fact, the person getting the reverse mortgage is the winner in the end.

We had my mother (now recently deceased) get a reverse mortgage. It worked well for her and we were able to keep her in her house until she got too old to care for herself. The only thing is once you sell the house, the money you use in the reverse mortgage has to be paid back from the sale of the house. In our case we still came out with money to help pay her nursing home care, and some inheritance for my brother and me, but it could have been a lot more if we had not gotten her the reverse mortgage, but I think for elderly people it's a very good idea.

I dont know but did you know where the word mortgage came from? Its latin you see.

Deathgrip and deathpledge. Basically means your screwed until you die dude.

My understanding is that the interest is compound interest, which is like a cancer. If your dad is married, I've been reading about widows being foreclosed on as soon as the man dies. I guess they have to waive their interest, and then when the husband dies, they are left homeless.
Only the banks win on reverse mortgages.

You do realise you won't get their house now because the reverse Mortgage company now owns it. You just gave away your inheritence...

Best answer award.

A bank offers you unsolicited help, expect to get fucked in the ass in the process somewhere along the way

Great if you're old and gonna die VERY SOON, have no heirs you care about, and need money to go out in a blaze of hookers and booze.

All other scenarios, terrible idea.

We looked into it for our mother, decided that the only winner was the bank. Not for us thanks

Its a bit the same with most nursing homes...you pretty well lose about 50% of your house to them, regardless of how long you are in the home.

They will only lend up to 40% of the Value. usually 7% interest which is steep. Adds up over time because it is compounded.

He is also to young and if he lives for another 20 years which he very well could then nothing will be left over.

Another way to look at it is this. If he's locked into it right now it doesn't matter what happens with the economy they signed an agreement. Just make sure that if the value of the house drops they can't cancell and call the loan after the fact and make him homeless.

Another way to look at it and I truly hope he's a prepper is that he will use the money to shore himself and the family up for whats to come.Food Food Food and reserves and barter and trade stuff. Then he may make money after the fact. Then yes take the money and run so to speak.

With the way things are going he probably has nothing to loose at this point.

Get the document and have a notary give you some advice or the lawyer you will be using to register this new mortgage at land titles. ASK QUESTION OF THEM.

ONLY good part is IF your the one offering the Reverse mortgage. TRhey get the cream, you get the skimmed milk !
Lose, lose situation as I read their contract a couple of years ago in CT !

These are most useful in end-of-life situations where the owner works closely with the person who would have to take over the payment. It does have it's place but 72? Waaaaaay early.

Thanks, Fred Thompson! Also, The Fonz. They are so desperate.