2007-08-04 05:10:37 · 6 answers · asked by Robert L 1 in Business & Finance ➔ Renting & Real Estate
There are a lot of upfront fees involved with Reverse Mortgages. That in addition to the investor guidelines restricts the amount you can receive. The lender needs to make sure there is enough equity to cover interest as well as the cost of listing and selling the home.
Taken from HUD's website:
For example, based on a loan at today's interest rates of approximately 9 percent, a 65-year-old could borrow up to 26 percent of the home's value, a 75-year-old could borrow up to 39 percent of the home's value, and an 85-year-old could borrow up to 56 percent of the home's value.
For more information on reverse mortgages, here is the HUD website.
http://www.hud.gov/buying/reverse.cfm
These are very costly loans, so please explore all options before taking a reverse mortgage.
Best of luck to you!
2007-08-04 06:21:21 · answer #1 · answered by Mortgagemom 3 · 0⤊ 0⤋
Yes to the answers given above. But stay away from a reverse mmortgage. They don't tell you all the fees up front that you will have to pay, and you are lucky if you can come out with $1,000 or more a month on the loan. You would be better off selling the house and living off that income, You don't say how old you are, but you also have to be 62 to get a reverse mortgage, so you can collect early Social Security to supplement the amount you get from the sale. Good Luck.
2007-08-04 11:03:16 · answer #2 · answered by Moe 6 · 0⤊ 0⤋
There's a certain amount of risk in a loan, for both parties. The banks want to make sure the risk is mostly on you, not them. There's a possibility that the value of your home could go down between now and when they get it. So they have the rules set up such that even in a case like that they're not likely to lose any money. That's also why most reverse mortgages are adjustable rate! They're no dummies!
2007-08-04 05:26:50 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Reverse mortgages involve risk for the lender because the length of time is unkown. Therefore they will only loan out about 50% of a homes value because the length of the loan is really unkown...but you can find out more information about reverse mortgages in some of the articles at this website
2007-08-04 17:30:33 · answer #4 · answered by Terry P 1 · 0⤊ 0⤋
how long will it likely be until they get their money back?
on a reverse mortgage, they don't even get interest until then. This means they need protection against the (currently likely) possibility that increases in the home's value will not keep up with the interest they have earned.
oh
2007-08-04 05:15:34 · answer #5 · answered by Spock (rhp) 7 · 0⤊ 0⤋
theres a grey area in RE, not knowing if it will go up or down so the 1/2 way mark is a good start for investors.
it gives them a leeway for the market to flex and you get the use of funds today until you decide to sell.
at that time they collect their accumulated interest.
2007-08-04 05:27:08 · answer #6 · answered by ticketoride04 5 · 0⤊ 0⤋