reverse mortage?

Question

I heard about this from a friend what is it and is this on the up. It looks to good to be true.

Answer 1

Basically (from what I know), it's a mortgage that works in reverse. After you have paid off your house mortgage, you can get a reverse mortgage and you are paid each month. (The bank, or whoever, buys back your house). When the mortgage is done, the house is no longer yours.

Here's a basic definition from wikipedia.org:

"In a typical mortgage, a home owner pays a monthly amortized amount; after each payment, the owner has more equity in the house. After a certain amount of time (typically 30 years), the mortgage will be paid in full and the property released from the debt. In a reverse mortgage, the home owner pays nothing each month and all interest on the debt is added to the lien on the property. If the owner receives monthly payments, then the debt on the house increases each month."

One of the requirements is that the person doing a reverse mortgage is at least 62 years of age.

EDIT: You should do more research. I've only written about what I've heard but I'm sure there is a lot more to it.

Answer 2

A reverse mortgage is a means for senior citizens on fixed income to use the equity in their home as an additional source of "income". The ideal candidate for this kind of program is a person too old to work who is house rich and cash poor. With this program like any other investment, you have to investigate the company to determine if they are legit. You have to be a minimum of 55 years old I believe to qualify for these programs. Once in the program you would receive a monthly, quarterly, or semi-annual check from the company. This can go on until death or until you sell the property. The advantage of doing this is that it will add to income without generating any additional payments. The downside is that you are using up equity that you accumulated over the years. The programs are set up so that you should never get into a position where you will ever lose the home. I personally don't think that these programs are scams but I don't think that they are a good fit for many people. Good luck. I hope this was helpful.

Answer 3

A reverse mortgage is totally legit. Typically, they are used by the elderly to free up the equity in their homes without having to sell the house to do it. You must be at least 62 generally to get a reverse mortgage. There are hefty upfront fees involved with setting this up, however. If the individual is planning on leaving the home anytime soon, the effective interest rate would be unbelievably high. Also, this does mean that you're eroding the equity in your home. When the house is sold, you don't have much equity left in it. If the person doesn't mind that, sometimes a reverse mortgage can lead to a more comfortable retirement for seniors.

Answer 4

It is sometimes a good option for older people that have paid off their house. They get to live in their house for the duration of the mortgage. Basically they give you payments for your home equity so you have a steady income and still get to live your house. Instead of pulling an equity loan you have to pay payments on and pay back, you get your equity given to you in installments. However in the end the bank owns the house. The advantage is it gives an extra tax free income to a retired person.

The bad thing is for their kids. There is no inheritance. In Texas if one parent dies, kids are entitled to half the house by law. So if a surviving parent does a reverse mortgage it actually cheats their kids out of their half of the inheritance. But then again their kids should be happy for them to have the extra money each month anyway.

The other advantage of it is if the parent(s) end up in a nursing home it is harder for the state to take their homes. In some states if you a parent owns a home and goes into a nursing home, if the house has not been sold three years prior to going into the home the state owns their house. They just passed this law in Texas lately. A reverse mortgage kind of works around that somewhat.

Answer 5

REVERSE MORTGAGE IS MAINLY OFFERED TO SENIOR CITEZENS WHO HAVE RETIRED AND HAVE NO INCOME. BANKS PAYS THEM EVERY MONTH BASICLLY LIKE INCOME BUT THAT MONEY COMES FROM THE EQUITY SO WHEN FINALLY WHEN THEY PASS AWAY THE BANK KEEPS THE HOUSE OR SOMETHING LIKE THAT

Answer 6

http://en.wikipedia.org/wiki/Reverse_mortgage

I dont agree with the product but do offer it. Yet just like any program make sure you fully understand the ins and outs before signing.