Are reverse mortgages a good deal?

Question

I found this site but i want to know if they are really that good of an idea or not?

http://www.nrmlo.com/rm/home.cfm?B=4&A=1642

Answer 1

Reverse mortgages are good thing not a bad thing. AARP, The National Council On Aging, etc., lobbied for a government sponsored reverse mortgage program.

Reverse mortgages help many seniors stay in their homes by giving them monthly income, paying for home health care, paying for home improvements to “age in place”, paying off current mortgages and debts so monthly payments do not need to be made anymore, etc.

Reverse mortgages are completely designed for seniors and their needs, versus traditional mortgages which are not.

Reverse mortgages allow for life estates and trusts to protect a senior’s home equity from Medicaid reimbursement, where traditional mortgages do not.

The problem with reverse mortgages is that the loan program is almost universally misunderstood. Because of this many seniors that could stay in their homes with a reverse mortgage do not know this, and end up in a Nursing Home prematurely. Their home equity then goes towards paying for the Nursing Home versus towards staying in their home.

Many people also have unrealistic expectations. A reverse mortgage is a mortgage loan and just like all mortgages there are closing costs and interest, even though you don’t pay these until you permanently leave the home.

A reverse mortgage is a benefit available at reaching 62 years of age, just like Social Security.

Reverse mortgages aren’t for everyone and cannot solve every senior’s problem, but reverse mortgages can and do help a lot of people.

Answer 2

It relies upon on the words of the non-public loan. normally, the be conscious won't come due until the borrower strikes out of the homestead, at which era the steadiness plus interest will become due. at that element, you are able to repay the be conscious or enable the economic business enterprise take the homestead. If the economic business enterprise takes the homestead, then it is going to sell the homestead and use the sales proceeds to repay the be conscious. If there are surplus proceeds, then that is going to the borrower. If there's a deficit, then the economic business enterprise may be waiting to seek for sequence from the borrower, relies upon on the words of the non-public loan. in case you do not have all and sundry to will your place to once you die, then in step with probability a opposite mortgage is a thank you to circulate. that's like merchandising your place yet attending to stay in it once you're nevertheless alive. yet be very careful by using fact I heard of one opposite mortgage the place the non-public loan replaced into scheduled to become due on a collection time era, which i've got faith replaced into 15 years. you relatively need to confirm and understand each and all the words. you are able to no longer assume that all and sundry so-reported as opposite mortgages are an identical.

Answer 3

There is a reason you are only allowed to take out a reverse mortgage on your property for the amount of 40% of it's value. By the time you have to move or sell, the interest will have eaten up the rest. If you need money, and own a home, as a former bank administrator I would recommend that you take out a home equity line of credit. The money is available if you need it, and you only pay interest on the actual amount you use. I do NOT recommend reverse mortgages.

Answer 4

Systematically getting INTO debt is never a good deal. That is the essence of a reverse mortgage. They also tend to have high interest rates.

Answer 5

I'm in Australia and work for a lending group here - there are several reverse mortgages on our panel that meet all guidelines in Aust.

They can be good to improve lifestyle, cover health requirements and to pay off debt (i.e. credit cards) when you no longer want to keep working.

If your in Australia - update your answer and I can put you in contact with the right sort of advice on them.

Answer 6

Try www.nrmla.com the national reverse mortgage loan association.
I am a former reverse mortgage broker and conventional mortgage borker and I can offer you a unique untainted view of the product.
Children hate reverse mortgages, because they think Mom or Dad are screwing them out of their inheritance. In some cases, Mom or Dad really need the money to stay afloat and being a burden on their children, and accomplish this without any monthly paments. Children should think of the alternative of having to take care of Mom or Dad before closing their mind to this idea. Now if children are still living with their parents in their parents home, it is not a good idea to do a reverse, unless insurance equivalent to the eventual payout can be purchased by the senior, leaving the child as the beneficiary to pay off the home.


As for banks poo pooing the idea of a
reverse mortgage, why do you think this is so. Well until recently, their big issue was that reverse mortgages were only offered as an adjustable rate mortgage. (This has changed with the new fixed rate reverse mortgage)Their REAL problem with reverse mortgages is that it cut into their profits. Banks do not like the reverse mortgages as there are no monthly payments (no cash flow).and they make a lot less money than they do with a conventional mortgage or home equity loan. They would much rather give you a home equity loan, as they make money off of the monthly payments.
I have seen many instances where they will run seniors into the ground with home equity loan after home equity loan, to the point where they cannot do a reverse because they have used most of their equity in their home. Do the banks care. No. If the senior can't make the monthly payments, they can simply foreclose on the home, which they often do, to get the rest of their money. And why can banks get away with this. Seniors are creatures of habit. Going into the same bank, year after year, they build a trust for the employees of the bank and want to do business, as anyone would, with someone they trust, regardless of if it puts them in a worse situation.

Fact is, most seniors will do a reverse mortgage only if they have to, if they have an immediate need for the money. Most of the time it is used as a rescue product for seniors who are at the end of their rope with their bank or other lending institution.

The sad thing is, it could truly help their quality of life in many instances, and releave their kids of having to take care of them. For instance, one insurance company offers a product that is a combination long term life insurance product and long term care insurance. (no I do not sell insurance) If a senior did a reverse and pulled 100k from their home, they could invest it in this product which would give them up to 2 times the life benefit and up to 4 times the long term care benefit, depending on their age. If they needed to use the long term care benefit to either receive care in their home or at a facility (where they wanted the care) they could stay at home for as long as possible and with 400k in coverage, not be a burden to their children. If they didn't need the long term care insurance, they could get up to twice the benefit or up to 200k in insurance benefit for their spouse or children, leaving a sizeable inheritance in the form of a nontaxable insurance benefit. The reverse mortgage would reduce the taxable portion of the home and everyone would be better off in the end. But do seniors see this. No. Many seniors refuse to face this reality, stating my kids will take care of me, which, for many children with their own families, working two jobs, is quite DIFFICULT. Do the children encourage their parents to look into reverse mortgages. No. Because they do not know about the product and how it can be used with insurance products to take this burden off their shoulders and increase their chances of receiving a larger tax free ineritance. Because they don't know about it, they go to their banks for information, and you already know what the banks will say and why they say it....

Because most seniors do not know about this option, and because most long term care insurance, aside from the type I mentioned, is hit or miss, they do not buy the type of insurance I talked about, and when they need long term care, they are usually put into a facility they do not choose, and are forced to have their assets (home) spent down to pay for their care. Many states now are forcing the sale of the seniors home to pay for this care after the seniors have died, leaving the children without this inheritance. This is really sad, when alot of these problems could have been avoided by proper planning.
It is also very easy for seniors with larger homes (ie 400k or more) to do the reverse, use part of the proceeds for the combination long term care and life insurance, then buy additional life insurance to fund a trust.

As far as what type of lender to use, Financial Freedom, Wells Fargo and Seattle mortgage are some of the big reverse mortgage lenders out there. It is best to compare monthly service fees, and other fees to get the best deals. ASk for a good faith estimat of costs to be sent to you.

It is best to get free HUD counseling after you get your paperwork, because the loan cannnot proceed until after you have received and forwarded your counseling certifcate. That way you can have questions answered regarding the paperwork by a neutral third party. However, be leary if the HUD counselor tries to steer you towards a certain lender, as they are not permitted to do this.

Answer 7

No. When the person dies, the bank gets the home, not the estate.

Answer 8

I think it won't be that nice