I could also use a layman's definition. My grandparents are 77 and 75. They have a fixed retirement income from government pension. They have a house worth about 130k and owe about 90k on it. They have trouble getting by. Please give suggestions.
2007-12-17 02:16:35 · 5 answers · asked by Brandon 2 in Business & Finance ➔ Personal Finance
I don't think a reverse mortgage would be good in their situation. While it usually is beneficial for older people to get it, they still have a large amount of debt on their house. A reverse mortgage is for people that have little or no debt on their house. They don't want to sell it to get money, because they need a place to live. So the mortgage company pays them monthly dividends, they get extra money, get to stay in the house and then there is just less money from the sale of the house for the estate when they pass away.
Basically, the bank is slowly buying the house back from someone w/ a reverse mortgage. I found this site below, it might prove helpful. I have no ties or knowledge of them, it just looked helpful. From the looks of it, your grandparents would have to bring 90k to the closing table to pay off their existing mortgage before being able to do this!
2007-12-17 02:31:31 · answer #1 · answered by Ren 5 · 0⤊ 0⤋
The laws differ from state to state. An advantage is, as long as your grandparents are alive, they can live in their home and get some additional monthly income. However, the mortgage company will require that the house meet all existing building codes. That may or may not be a problem. Also, when they do eventually pass on, the debt will pass on to their heirs. That might be solved by surrendering the house to the mortgage company. It would be good to ask the prospective mortgage company about what is owed to them at the passing of your grandparents. It would also be important to ask what would happen should they have to move into a senior facility.
2007-12-17 02:27:50 · answer #2 · answered by jack of all trades 7 · 0⤊ 0⤋
Reverse mortgages are good for older couples who flat out own their home or owe very little. It allows them to earn money from a lender every month and then once they pass and the house is sold the lender regains their portion with interest. Since your grandparents don't own their property and still owe a huge portion of it, they probably wouldn't qualify plus it would force whoever inherits the property to basically sell it right away to pay off both lenders. Perhaps they should try a basic refi to lower the monthly payment.
2007-12-17 04:10:19 · answer #3 · answered by Anonymous · 0⤊ 0⤋
it is not for them it is for folks who almost have there place paid for -- they would be better off selling and moving takin the 40k nd moving into a small place such as apt!!!
2007-12-20 23:50:32 · answer #4 · answered by Anonymous · 0⤊ 0⤋
See http://seniorliving.about.com/od/housingoptions/a/reversemortgage.htm
2007-12-17 02:27:37 · answer #5 · answered by SDD 7 · 0⤊ 0⤋