What ia a reverse mortgage?

Question

Is a reverse mortgage an ideal thing for senior citizens and does the family loose inheritance of the property upon the deaths of the home owners.

Answer 1

It is a way for the elderly to borrow the equity from the house. HUD.GOV and AARP.com can explain it. You pay high fees and can borrow about half your equity in a lump or monthly payments. It cost the estate what the person borrowed plus fees and interest and they the person sells the house it needs paid off so if you borrow at 62 and want to move at 70 you may not be able to afford the replacement home. The older you start the more you get and the more sure you will want to age in place.

Answer 2

I tried to get me grandma to do it, but a couple of her sisters refused and now she is slowly died in a senior citzens home while they took 200,000 of the equity she made. Rant over.

A reverse mortgage is simply that. You have to be 62 years old. An appraiser checks out the property value. Lets to make it easy say its 200,000. Lets say the senior citzen doesnt owe anything. Im making these figures up for the example.

They have 3 choices.

1. Lump Sum payment (bank gives them 120,000 and they live in the house until they die)

2. Lump Sum Portion and payments (Bank gives them 50,000 and 1,500 a month until they die.

3. No lump some just payments. (Bank gives them 2,500 a month until they die)

When I say until they die I mean until their revenue runs out. There will be a set amount. But they dont have to move out of the property if they run out of payments. They will never make a payment again on the property.

If they move out of the property or when they die, the hiers to the estate have first right to take over the property. They just have to pay the bank off what the bank has given to the senior citizens. If the hiers decide not too, the house is the banks responsibility.

To answer your question bluntly. Yes they are spending the money they have worked to build in their house over the past 50 years. But that should be their right in my opinion.

Many loan officers dont know how to do it, and normally you need to be trained to do it. The senior citizens will have to take a training course, which their siblings/children can go to. And then its just a math formula on what they get.

Sorry long answer but its extremely complicated. Call 20 of your local loan officers or brokers. Only deal with somebody that has done at least 2 in the past year. They all get paid the same with this loan, so dont worry about a loan officer trying to get extra. They have a limit, and its not alot.

Oh forgot, there is no income or credit qualifications to the borrowers. Its based soley on the value of the property and age. Older they are, more they get.