Reverse Mortgage thoughts?

[simpleman]

I have been getting mail from various "organizations" wanting me to do a reverse mortgage.
It sounds good, the cash out amount would be really nice! When I google reverse mortgages I get some saying it's the best thing since slice bread and others say it's the worst thing you can do. If things go south, I won't have to worry about making any house payments and the money could go to a BOL.
But of the housing market crashes, I will be screwed!
Has anybody done one?
Your thoughts on them if you've done one or not!
Thanks

 

[LadyLocust]

I have been getting mail from various "organizations" wanting me to do a reverse mortgage.
It sounds good, the cash out amount would be really nice! When I google reverse mortgages I get some saying it's the best thing since slice bread and others say it's the worst thing you can do. If things go south, I won't have to worry about making any house payments and the money could go to a BOL.
But of the housing market crashes, I will be screwed!
Has anybody done one?
Your thoughts on them if you've done one or not!
Thanks

Run the other way!!!! (Oops did I say that out loud?). What if you still own your property? Are you able to live within your means now? Do you really trust the government? I’m just asking questions.

My inlaws did it and are now facing the consequences . We did not know they did it until within the past year as they need to move to a more reasonable house as they age (in their 80s and 90s).

Americans have 60% of their worth in their homes. Gov is creating ways to get those assets into “economy” meaning their pockets and leave folks broke. You’ll be seeing new ways to get a second mortgage soon

Okay- I will stop- you have suffered enough of my input.

 

[OldSchool]

This is already reminding of a thread I read elsewhere when someone started a thread about the reverse mortgage he singed up for and the comforting feeling it provided.

He was ridiculed so badly I felt sorry for him. But then that forum wasn't known for having an overly kind and considerate membership base as we have here.

 

[simpleman]

Run the other way!!!! (Oops did I say that out loud?). What if you still own your property? Are you able to live within your means now? Do you really trust the government? I’m just asking questions.

My inlaws did it and are now facing the consequences . We did not know they did it until within the past year as they need to move to a more reasonable house as they age (in their 80s and 90s).

Americans have 60% of their worth in their homes. Gov is creating ways to get those assets into “economy” meaning their pockets and leave folks broke. You’ll be seeing new ways to get a second mortgage soon

Okay- I will stop- you have suffered enough of my input.

Love the input and the way it was presented!
If it was up to just me, not the wife, I would buy some more land with a small house and/or buy gold.
I heard, I can will the house to our son with no hassle.
Think I may need to talk to a real estate lawyer on that and some other stuff.

 

[LadyLocust]

This is already reminding of a thread I read elsewhere when someone started a thread about the reverse mortgage he singed up for and the comforting feeling it provided.

He was ridiculed to badly I felt sorry for him. But then that forum wasn't known for having an overly kind and considerate membership base as we have here.

That’s sad. I wouldn’t ridicule anyone (not even in-laws) but if I can help prevent what they are now encountering . . .

 

[elkhound]

nothing but scam to me...wealth transfer is all it is.

 

[OldSchool]

Love the input and the way it was presented!
If it was up to just me, not the wife, I would buy some more land with a small house and/or buy gold.
I heard, I can will the house to our son with no hassle.
Think I may need to talk to a real estate lawyer on that and some other stuff.

A real estate lawyer will probably give you better advice than a financial advisor.

Financial advisors tend to strictly look at only what looks good on paper, giving too much faith to the banking system and the health of economy in general.

The biggest problem with a reverse mortgage is signing away your rights to the property and trusting the financial institution to honor the agreement, as if they'd stay liquid for that long.

 

[Supervisor42]

But of the housing market crashes, I will be screwed!
Has anybody done one?
Your thoughts on them if you've done one or not!
Thanks

<zipped my mouth
If you have no children or heirs, it is absolutely the best thing you can do!
Leave the state and the fed NOTHING!!!

 

[Hardcalibres]

That’s sad. I wouldn’t ridicule anyone (not even in-laws) but if I can help prevent what they are now encountering . . .

It is an interesting philosophical question for people on forums.

Which is more important, not hurting people's feelings.....or trying to talk them out of doing something that is not in their best interests?

 

[Hardcalibres]

nothing but scam to me...wealth transfer is all it is.

Yep the best thing about forward mortgages is that after you finish paying off what your property cost a couple of decades ago (plus interest), you almost in all cases own something worth a lot more.

In a reverse mortgage, it is the financial institution that contracts you in a reverse mortgage that reaps that windfall at the end of the contract (and about the same time they turf you out on the street if you live that long).

Reverse mortgages are mostly marketed to the retired. So.....exactly what date do you plan to die?

You will need to know that to make a reverse mortgage work.......

Perhaps if you are unexpectedly still alive then, you can eat a bullet.

It may be either that, or be the oldest homeless person in your area.

 

[Supervisor42]

It is an interesting philosophical question for people on forums.

Which is more important, not hurting people's feelings.....or trying to talk them out of doing something that is not in their best interests?

I thought I did a pretty good job by not dragging him thru our story of what happens afterwards.
When it makes sense: For people that did not prepare well for retirement and are having to borrow money on high-interest loans, just to make ends meet. A RM is better.

 

[OldSchool]

I thought I did a pretty good job by not dragging him thru our story of what happens afterwards.
When it makes sense: For people that did not prepare well for retirement and are having to borrow money on high-interest loans, just to make ends meet. A RM is better.

You took the words out of my mouth about it. But I would have followed it up by saying: When a person has a long history of making bad financial decisions.... one more is no big deal.

 

[dademoss]

In-laws have one. They are well and truely REDACTED. Thinkin maybe they wish they hadn't bought a yacht and traveled the world now.

 

[dademoss]

Yep the best thing about forward mortgages is that after you finish paying off what your property cost a couple of decades ago (plus interest), you almost in all cases own something worth a lot more.

In a reverse mortgage, it is the financial institution that contracts you in a reverse mortgage that reaps that windfall at the end of the contract (and about the same time they turf you out on the street if you live that long).

Reverse mortgages are mostly marketed to the retired. So.....exactly what date do you plan to die?

You will need to know that to make a reverse mortgage work.......

Perhaps if you are unexpectedly still alive then, you can eat a bullet.

It may be either that, or be the oldest homeless person in your area.

You were more tactful, thank you

Facebook and my financial advisors are close on the date

You all are in for a long ride

 

[UrbanHunter]

The data that I've seen tells me that it is a way to separate you from your property. I read that there are several "Fees" that add a couple of percent a year to the cost of the loan, and with compounding interest that can add up to a lot. Then there are origination fees, insurance fees, and the like. What I have read is that you can get about half the value of the property now and your estate can keep what is left after they sell it and deduct all the fees, interest, principle, and such.

Might be better off to sell it and down size. The trouble with cashing out something is that money spends way to easily...

 

[lonewolf]

I have been getting mail from various "organizations" wanting me to do a reverse mortgage.

its called "equity release" over here.

 

[old tex]

This is just what I think. Reverse mortgages are a lot like leasing a car. Both can be good for some people & bad for others. If I had to guess the percent of people that they are good for it would be between 5 to 15 percent. The others would range between this isn't good to OMG what did I do to myself. Remember if the companies making the deals didn't think they would come out on top, they wouldn't do them.

As for being afraid about losing value in your house, don't listen to the national stats. Housing prices are localized. If CA & NY prices plumet it means nothing unless you live there.

 

[Mountain trapper]

Don't fall for it. It's a scam. My father in law fell for it and lost everything. Why not just sell?

 

[elkhound]

You were more tactful, thank you

Facebook and my financial advisors are close on the date

You all are in for a long ride

View attachment 153648

as long as you die before getting captured and probed....lol

 

[Mountain trapper]

A reverse mortgage makes about as much sense as buying an annuity from an insurance company.

 

[Jim Costa]

The two biggest negatives I see in doing a reverse mortgage:

1) If that company goes bankrupt, you are screwed.

2) If this country does indeed have a Jubalee in loan forgiveness on bank loans, you are screwed.

P.S. Delay your decision at most 3 months. By then you will know if there is to be a jubalee.

 

[Weedygarden]

Not a chance in hell that I would do that. I know people who have. If you are hurting for money, sell your place and move to someplace more affordable.

Decades ago, a man and his wife were involved in the custom jewelry business. Who bought his custom jewelry? Wealthy people, rich and famous, way above his means. He and wife began hearing about ski vacations to Europe from their customers. They wanted to keep up with the Joneses!!! But they didn't have the money to keep up, however, they had equity in their home. They did a reverse mortgage on their small home in a desirable area and they used the money to live like the Joneses with vacations and travel. Then the area where the jewelry shop was, was upscaled even more and the price of leasing became outrageous, more than they could afford, and other jewelry stores moved in. He decided to close his business. She got MS. They could barely afford groceries and they now had no equity in their home, well, because the skied in Europe with rich and famous people! Their home had one bedroom, upstairs, and once she got MS, she could no longer climb those stairs!! He had to carry her up and down!! And he could barely carry her, even though she always was too thin, from starving herself and taking laxatives to help eliminate weight.

She died a few months ago, and who knows what he is going to do now that he doesn't even have her SS to help with the bills. He has been depressed, very depressed.

Reverse mortgage? Nope! Especially for people whose money always burns a hole in their pocket.

 

[Hardcalibres]

.......... Why not just sell?

Because, as the very old saying goes, people want their cake and to eat it too.

That saying sums up the reverse mortgage exactly.......and tells us that the idea is nothing new.


The best scams are those that prey upon the most common human weaknesses.

There is also a correlation between the most profitable scams and how much they spend on advertising those........if a product is being pushed hard on folks, it is almost certainly a scam.

Unfortunately, cynicism is a useful defense mechanism/mindset for the modern world (and it can be argued that it has always been).

Rule number 2:

Whenever there is any doubt....there is no doubt.

 

[montanabill]

my neighbor did one of those deals to lower his payments and pull some money out... He was a little late because they were off taking care of parents in another state and the forclosure notice appeared on their front gate immediately.

 

[forcast]

<zipped my mouth
If you have no children or heirs, it is absolutely the best thing you can do!
Leave the state and the fed NOTHING!!!

Agree with no kids. Mom had a reverse mortgage it was a nightmare emptying the property. You dont have to. And deciding if your able to afford to buy it back or try and sell for more then she got for the house. No kids No problems. Your dead its the reverse mortgage companies problem. Dont do the one that you sell and then rent it back.

 

[joel]

I looked at it for my mother, not a good plan, they get everything.
First you will not get what it is worth & it is a loan, not a mortgage on paper, so you do not get the mortgage protection.
Two after you sign, all increase in value goes to the loan holder, not what would happen in a real mortgage.
This is a great plan if you are old & broke, do not mind giving away a home that needs repairs & up keep.
But if your home is in good shape/repair, sale, down size to a smaller home or patio home, have a lawyer read the fine print on the new home.