Does anyone know about reverse mortgages?

Question

My mother has talked to a consultant about a HUD reverse mortgage. She thinks she needs it to help in her retirement. Is it a good deal or a rip-off?

Answer 1

Reverse mortgages are a legitimate option for senior homeowners. Each person's needs/situations are different, so it's wise that your mother speak to a mortgage professional to weigh all her options.
Reverse mortgages loan out money based on the value of your home, interest rate and age of the borrower. The amount of money can be divided up by monthly increments or in a lump sum. She can use this money for whatever she wants.
A HUD Reverse Mortgage does not have to be repaid until the borrower dies, sells the home or doesn't reside in the home for a year. However, there are other instances that can cause default and require the borrower to pay back the loan.
Once the borrower no longer resides in the home the heirs can refinance or sell the home. If the proceeds from the sale doesn't cover the loan, HUD will pay the lender the remaining balance.

The link below has some good information and a reverse mortgage analysis tool to help you.
http://www.seniorjobbank.org/rm/index1.html

Answer 2

They are a new thing, and I have not heard good things about them. I would not recommend it. If you know a good financial advisor or banker that talks plain english have them explain it to you. It is a way to end up paying more for your home than on a conventional mortgage. I worked in mortgage foreclosure for 2 & 1/2 years, banking for several years, and did real estate for a year. From what I know the way to finance a home the best for the buyer is to get a conventional mortgage. It is the original way and will not put a person in financial uncertanty as an ARM or reverse mortgage. They use to have simple interest mortages, but that has not been around since the early 1900's, which was the best loan, but that was replaced with conventional financing where a person is paying the interest upfront at the beginning of the loan. It is a rip off but better than all of the other loan programs that just keep a person paying.

Answer 3

I do not know but, I do know they sound too good to be true so there has got to be a BIG drawback. I wonder if the credit given on the house would be enough to tide a person over and if not maybe the person could not get any more money from their house because it was tied up with that. There are many banks now that do not want to get involved with mortgages that are goofy in the slightest. So in other-words, I'm wondering if the house is worth say 300,000, will they only reverse mortgage say 150,000 and then the rest is tied up because of the first so if the person outlives the first what do they do then?

Answer 4

It very much depends on your mothers circumstances whether it is the best choice, however they are by no means a rip-off. Have to talk to professionals, though. The best lender is www.financialfreedom.com.

Just remember to do what's right for her and not worry about how much equity you will have left to inherit. That is usually the biggest concern for the heirs.

Answer 5

Riff OFF - only the banks will WIN !!
you need to go to daveramsey.com learn what the banks don't want her to know before she loses the house.
they have the highest fees in the industry, the most escape clauses and default clauses for the banks winning of any 'legal' contract other than payday loansharks. Don't do it!
she can lose the house for being away from the home tooo long (as little as 30 days), she can get upside down and they call it if area goes down in value (can you say market correction). Do your homework before signing any thing get others input .
i will not get to visit her.