I want to do a reverse mortgage for my grandparents. How do I?

Question

My grandparents are in their 70s and are still working, despite their being retired. They are required to continue working to pay the bills so I am wanting to propose to them the idea of a reverse mortgage with me paying them and then taking over the property after they are deceased. Is this possible and if so who do I need to contact and what kind of paperwork do I need?

Answer 1

A true reverse mortgage hands title over to the bank. For what you want to do, you would have to persuade your grandparents to sell, and specifically to you. Then, I think (not sure) they may get away without a capital gains penalty. Not sure.

This is complex. The wills have to be straightened out so if there is any rivalry you don't lose whatever effort you put into this. Realtors use lawyers. Lawyers usually have a local Bar association. I would think the whole process begins talking to your grandparents and I would think they should have a contract that protects them if you can't afford unforeseen expense (always possible with a house).

Answer 2

Andy has the correct answer. Some of the others are totally wrong.

Your grandparents sound prefect for a reverse mortgage. Reverse mortgages are designed to provide seniors with the income to stay in their homes as long as possible. Reverse mortgages are the most misunderstood and most regulated loan product in the country. #1 myth is that the bank takes your home. A reverse mortgage is a loan just like a traditional mortgage. The bank never wants to take the home.

Basically, with a reverse mortgage the bank pays them versus them paying the bank. They make no payments on the loan until they pass away and the home goes to their estate or they permanently move from the home. At that time you would refinance or sell the home to pay off the balance. Reverse mortgages are non-recourse mortgages so you can never owe more than the value of the home. This is pretty unlikely anyway, as the bank only lends on a portion of your grandparent’s equity and the bank uses conservative calculations, such as 4% home value appreciation a year. When they take the reverse mortgage, any current mortgage and any bills can be paid off. Thus, your grandparents can live payment free. Depending on their figures, they should be able to also get monthly payments from the bank. Therefore, you shouldn’t need to have to support them, which is what I think part of your question was?

You should also look into a life estate or trust to protect the home’s equity from the State should they ever go into a nursing home, etc. The State will put a lien on the property to recoup as much of the Medicaid as they can from the house. The law changed from a 3-year look back period on the house to a 5-year look back period. With a life estate the property would be yours and they would have the right to live there for life. Unlike traditional mortgages, reverse mortgages are designed for seniors and allow the property to be held in a life estate or trust. It is much easier to do this prior to closing then post-closing. Go see an Elder Law attorney.

Many seniors are first introduced to reverse mortgages by their children or grandchildren as a way for them to remain independent and in their home.

Good luck. For much more info go to the link below.

Answer 3

Here is the correct answer. First, your Grandparents are required to remain in title to the property to get a reverse mortgage. All borrowers must be over age 62. FHA guarantees that they or their estate will never owe more than the house is sold for after both of them no longer live in the home as their primary residence.
The way this works is the lender only makes a portion of their equity available to them. If their home was worth $100,000 they would probably have access to about $60,000 after all costs were paid. They are only charged interest on the portion of the available funds that they actually use. To get the process started, you need to contact a qualified reverse mortgage lender. The top 3 in order are Wells Fargo, Financial Freedom, and Seattle Mortgage.
This loan could be a big help to your Grandparents, so you need to make sure you are getting accurate information so they can make an informed decision. AARP.com also has some great info on this loan that is independent from any specific lender.
Good Luck!

Answer 4

Andy has the best answer and advice so far. Before you go any further I would strongly suggest you get a real estate attorney and your grand parents get the counselling that is mandatory before any reverse mortgage is done.

There are lots of resources out there AARP is an excellent one.

Interesting idea-good luck!

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Answer 5

hi, reverse mortgage are designed to confiscate the property. sorry for the hard words. do the math. get a printout of the ammortization of how much you get after paying the loan amount after your parents pass away, 10,20,30 yrs from now. they will say,' look how much your property value 30yrs from now,'.. 30yrs from now no one can affort your property in the amount shown if you sell it. because thats what you have to do to pay them off. since no one can afford the price you are asking in that time, they will have to....... ??? you guess. reverse mort. is good if you are not interested of the property. your best move now is to help your parents with the mortgage. default on all credit cards except one and 'settle ' with the credit cards before they send it to the collection agencies. your parents have paid those cards more than they owed. buy your parents property now for the balance of the loan. it will be the cheapest house you have ever bought in that area.

Answer 6

try Bernard Jones of Wells Fargo, he is an expert at it... [e-mail]