Reverse Mortgage pros and cons?

Question

Heard about them, need more info. Thinking about maybe getting one if can get more input from other folks, not the company.

WOULD LIKE INFORMATION. I REALIZE I AM ELDERLY, BUT I ALSO KNOW THAT OTHERS OLDER USE THIS SIGHT ALSO. NOT JUST 25 AND UNDER PEOPLE. I AM ASKING FOR INTELLIGENT INPUT PLEASE, AND THANK YOU.

Answer 1

Whether or not a reverse mortgage is good for you depends on your needs and priorities. Basically, a federally guaranteed reverse mortgage (which is what most people get) will provide you with a loan equal to about half the equity in your house. Take the value of your house, subtract any mortgage or home equity loan you already have, and the reverse mortgage loan would equal about half the remaining equity. You can get the reverse mortgage funds in monthly payments, a lump sum or a line of credit.

You won't have to repay the reverse mortgage until you move out of the house permanently, sell the house or pass away. So you get to stay at home, and live on the funds.

The price of this loan includes high fees paid up front, and the likelihood that your heirs will inherit little or nothing from the house. Since repayment of the reverse mortgage is delayed for a number of years, the amount that must be repaid will probably greatly exceed the amount of the loan (because a lot of interest accrues while you live in the house without repaying the loan).

Those are the basic tradeoffs. If you are cash poor but house rich, and want to live in your current home, a reverse mortgage could make sense for you. But understand that your heirs probably will get little or nothing from that house. If you just need money to live on and don't need to stay in your current house, you might want to sell the house, buy a smaller place for cash, and live on the remaining cash. If the numbers work out right, you could leave the smaller home for your heirs (if that's something you want to do).

Answer 2

I read a good article on David Selig's blog about Non-Cancelable Line of Credit & No-Recourse Reverse Mortgages. He says that Reverse Mortgages were specifically designed for house-poor seniors and elderly spendthrifts. Which is why so many unscrupulous sales promoters target senior citizens. Under this sort of financial pressure, many senior citizens have been swindled. Conversely says Selig, ethical accountants and attorneys recommend that qualified people, age 62 and older, take advantage of the existing no-recourse equity conversion loophole.

Answer 3

As a loan officer, I find these to be fantastic for the right people. First of all, they are safe. Here's why.

1. They are backed by the government. in other words, you won't here some scandal about them in the future because the government subsidizes them.

2. No matter what happens in the real estate market, the bank can't renig on the loan or make you pay it off even if the balance surpasses the value of your home.

3. They make you go through an educational piece to make sure this is the right plan for you.

4. If you pass away, the bank only recovers the balance plus closing costs and accrued interest. Whatever is left goes to your estate. there is a misconception out there that the bank does these loans in hopes that you'll pass away and they can make a profit on your house. this is not true

5. You'll be able to pull out cash to live off of or invest without making payments.

Some Drawbacks:

1. It's pricey. the interest rate is typically higher, the closing costs are higher and interest is earned on the financed closing costs.

2. Your mortgage balance will continue to increase and eat into your equity. If you intend to sell in the future, you need to be mindful of this.

Reverse mortgages are really designed to help the retired continue to live in their existing residences even though their income is lower than it used to be and property taxes and insurance have increased. Removing a mortgage payment offsets these burdens and allows the recently retired to continue to live their same lifestyle and even take out cash to keep in reserves just in case.

This is should not be taken out if you can comfortably afford your lifestyle. The cost is lower and your assets will remain higher.

Answer 4

If you are looking for a reverse mortgage to receive some much needed cash, you may want to look into a reverse mortgage wholesale loan. This is the perfect way for you to get a reverse mortgageagencies that sell reverse mortgage wholesale lender accounts. These agencies are the Federal Housing Authority, the Fannie Mae foundation and the Financial Freedom Cash Account.

Answer 5

A reverse mortgage is a slow motion SALE of your home in which you PAY a ridiculous interest rate. You are better off selling outright, putting the proceeds in the bank, and renting the house back from the buyer.

Answer 6

Agree with most of the answers above. One thing not mentioned....if you are on the lower end of the spectrum....say just now 62 and you still have a mortgage, this allows you to eliminate your mortgage payment, stay in the house and possibly defer taking your Social Security until a later date.

Answer 7

I believe that most if not all " Reverse Mortgages" are "negotiated" by banks &/ or finance companies.---Has anyone ever heard of a "Bank" & or "finance " company which gave much if anything to a borrower or customer.--Hell NO.---Banks & finance companies are in business to make money for the BANK.---if you can think of an "unprintable" word to describe their usual business practice put it in above.---THEN, and ONLY then consider &/or talk about "reverse Mortgages".---In the end, you are selling your home at a greatly discounted price. It's just like a life insurance policy.--They use the life expectancy tables to estimate when you are likely to die.---AGAIN, they are NOT acting in or for YOUR benefit.

Answer 8

If you have basicly no equity can you get a reverse mortgage.

Answer 9

how can I fine the best reverse mortage company for me ?

Answer 10

if you are 65 or older...read up on them yourself... they don't really pertain to anyone on Yahoo answers. (most of the people on here are under 25)