OT::Reverse Mortgage ?'s

Dad"s been seeing alot of these reverse Mortgage Commercials, and it had him wondering what the catch is. Do they give you so much on the dollar for the house, and you keep it up (maintanence)to their specifications,and then after you die, they sell the property for more than they gave you?Or does it get worse? As in you can only use so much of the $$ and the rest goes to a bank account, if they don"t like what you have done for maint. they hire some overinflated carpenter to come out and do some work and charge you for it? He tried looking on line for some information,but they all want personal information,IE SS#"s DOB- so on and so forth. So thought we"d ask here, after all the best advice is free.Or is it you get what you pay for? LOL.
Thanks, Victor

From what I have heard the banks make a ton of money off of one of those. Bottom line the banker is not your friend.

I think it is a way to rip people off. to my understandg what equity you have they will give you
on a monthly basis then throw you out.

Essentially a reverse mortgage is a type of annuity. The bank takes you age and plugs it into a formula. They then essentially bet with you on how long you should live. If you die when they say, they break even (minus what they take for writing the reverse mortgage). If you die before they profit. If you die after you profit. In the end they get the house. As for how an individual plan would work that is where the fine print comes into play. If you really want to learn more find a financial planner to discuss the options.

Good that you are cautious re. these deals. You can ask all you want but all that matters is whats on the paperwork your dad signs. As the other guy says they are NOT your friend its all about fees, commissions, closing costs, ect. that all come out of what ever equity he has.

Just another scam to $crew you out of your home.

Boy Thanks a Lot guys. I have No intention what so ever to get involved with this rip off. Any way I don"t own the property any way. Just Curious.I"m leary of any schemes that promise you good things. There is always a catch and P.T.Barmum had it right. "A sucker born every minute". I also take notice of the AARP & others that want you to enroll in their insurance policies along with using your MEDICARE/MEDICADE.It"s no wonder the system is going belly up.Looks like to me, these charlitens(sp) cant wait to JUMP on any thing that remotely resembles making a buck any way they can at the expense of the older folks in particular. JMHO. Yep I know, These schemes aren't just directed to seniors. Out to get any body that could use help. Like SHARKS circling the waters, every thing is fair game to them.
Well enough of my rant and curiousity. Thanks for the information. Reguards LOU.

Here is my take on it, and I know all circumstances are different. Usually when soneone is thinking about a reverse mortgage they are close to not wanting to maintain the house. Sell the house, you get to keep profits up to $250,000 for a single and $500,000 for a couple tax free. Then rent something, perhaps sell the house to your kids and rent it back. This frees up money and provides lots of flexibility. Also see a lawyer for an estate plan.

The way these work is to essentially turn your house into an annuity. You're selling your house, presumably at below-market price, but instead of cash you get a guaranteed cash flow plus the right to live in your house. I assume you have to agree to keep the house insured and in good repair. I would also assume that you agree up front to let them make repairs out of your annuity proceeds if they deem repairs are necessary and you don't take care of them in a reasonable length of time.

Back when interest rates were high it made a lot more sense than it does now. With real estate values in the toilet and interest rates close to zero, you're better off to hang on to your house if it's paid off or you can afford to keep making payments.

Everything you said and it GETS WORSE.
The reverse mortgage is only for a set time then you get kicked out.
The payments are figured from the aunnity tables that say you should die at a certain age then the bank figues it's their house to sell, ata profit of course. If you out live the tables, at today most people do, the bank still wants the house.

Yikes! I had never heard of these things. Sounds to me like a fancy way to con people out of their life savings. My mama sure was right about bankers. LOL

Christopher

sometimes i think there are more swindlers engaged in screwing people out of their hard earned money than there is working for a honest living . just look at the ads on tv. crooked lawyers with their bait , cure all snake oil ads, selling gold now that it is out of sight in price . no end to the games they play .

A friend did this two years ago. He had been talking about it and I recently asked him about it and he is very happy. Of course a lot has changed in property values and banking in two years and he had it in the works for some time before it happened. As others have said it's a deal where if you die soon they do better if you last longer they don't. He has appeared to be in very poor health since I have known him for about twenty years. That may help to get a good deal. LOL

Look at it this way. Its kinda like a loan secured by your home as collateral. If you dont repay the loan they take the collateral (part or all)

John T

Any and all commercials you see on TV are scams of one sort or another.

Legal or not, they're aimed precisely at "getting to your pocketbook".

That’s their entire motivation to run the ads.

Allan

you get a monthly check, and htese plus interest are added to your " loan "
no money gets re-paid until your death, and the loan gets settled out of the estate or sale of the home
good way to throw away your equity i guess, but for elderly people struggling to make it, why not use your house to live a comfortable life
only ones really getting short changed are the heirs, but if you are counting on your parents assests, you have not done a very good job with your own life
bob

RUN It is NOT a good thing my best friends next door neighbor had one of those things and when all was said and done she got tossed out of her house and ended up in a home It didnt help that her grandchildren alwayse showed up to "borrow" money all of the time,untill the well ran dry,after that no more visits.Just another way to screw people who realy dont have anyone looking out for them

A scam artist set up an appointment with an elderly relative a few months ago and she asked my Wife and myself to come over, about the third sentence out of the scumbags mouth was ''regulated and insured by the FHA'', that was enough, out the door. Reason enough to shy away is because reverse mortgages are brought to you by the federal government, specifically HUD and the congress, the same bunch who created the ''community reinvestmnent act'' which was a major cause of the artificial housing boom and subsequent bust. Anyone who reccommends that another person mortgage a paid for roof over their heads at any age is highly suspect.

Lots of minds like concrete on here- All mixed up, and permanently set!

I'm just speaking of the reputable outfits (there can be scammers in every situation)- but the biggest misconception in the answers below is that at some point, they throw you out of your house. Not true. Its simply an annuity, funded by your home equity. The payments may stop if you outlive the annuity tables (depending on the terms of the contract), but you stay for life.

Works fine for a senior who wants to stay in their house, can't afford to as it stands, and the kids (if any) won't or can't help.

I sure hope none of the naysayers have a "Living Trust"- that's really the pot calling the kettle black, because living trusts are the biggest scam of all.

Mike, AMEN on the Living Trust its NOT the method I use for my clients. Instead I do mostly TOD or POD, Joint accounts with rights of survivorship, correct primary and contingent beneficiaries where applicable, and Deed the homeplace reserving a Life Estate. Then I do their Durable Power of Attorney and Appointment of a Healthcare Representative, a Livign Will and a regular Will and they leave ready to dieeeeeee. All for much less then a Trust while paying me a decent wage yet saving them several bucks. Pretty much a win win in my opinion.

John T

Lou--there are 3 types of these available. This is some of the info on the most popular of the 3.

Available since 1989, the oldest and most popular reverse mortgage is the Home Equity Conversion Mortgage (HECM) which is offered through banks, mortgage companies, and other financial institutions. The federal government insures HECMs through the Federal Housing Administration (FHA), a division of the U.S. Department of Housing and Urban Development (HUD). The HECM program guarantees that, as long as they remain in their homes, homeowners will receive the loan advances initially promised them, even if their homes decline in value or the financial institutions that make the loans go out of business.

Lou--if your Dad is really interested, exercise caution, like anything one should do when $$ is involved....

THE TYPE MENTIONED ABOVE would be the first type I would investigate----WHY?

Comparing reverse mortgage products can be complicated. Lenders who offer HECMs can analyze the projected costs of these loans. HECMs "require reverse mortgage counseling" through HUD-approved agencies; the mortgage counselors at these agencies can also help homeowners decide which type of reverse mortgage is best for their circumstances.

These are not ALL BAD, and, in some situations, are the only source of income for people when they are at an age where you don't want to be worrying about where/what you are going to eat..
you can even get the required counseling BEFORE you sign the docs.

Tim

The thing that bugs me the most about living trusts is that they're sold so the heirs can avoid probate. Going price for a living trust right now is about $3,500, and most of my probates are under $2,000. So explain to me again, Mr. Living Trust Huckster, just why are we trying to avoid probate? And most of the time, the folks have failed to put all the assets into the living trust, so a probate becomes necessary anyhow.

Agreed---"And most of the time, the folks have failed to put all the assets into the living trust, so a probate becomes necessary anyhow."

I have seen this more than once. Unless somebody takes folks by the hand to get the correct re-titling, trust or no trust, the asset will be probated..

In my area, spousal wills, living trust and no special needs, $3500 on the "low" end...

In "most" cases, simple TOD,POD, correct bene arrangements can be the most effective (no/low cost) method to use.

Tim