October 10, 2008 - Man, 69yrs old getting divorced, need to use a reverse mortgage to purchase, i need it explained to me, how it works.
Responses:
A reverse mortgage does not allow you to purchase, unless you are thinking that the soon to be X and him get a reverse mortgage on the place they live in currently, and she gives him his portion .....she would essentially be refinancing into payments she doesn't have to make and then he goes on his merry way. The problem is that a reverse mortgage is not going to give you 100% what the house is worth. The costs are higher than other options and in his circumstance it would be a poor financial decision.
Divorce is a HUGE contributor to poverty. If anything he should force the sale of the house to get his 50% out of it, but then you have 2 elderly looking for new housing in a much higher market.
A better alternative is a good marriage counselor or erect a wall and make the house a duplex.
A reverse mortgage is not a purchase at all it is a refinance of his current home. There MuST be a lot of equity in the home in order to make this one work. It is an FHA product for the elderly that allows them to take cash out of their home and never pay on the money. It just sits there and collects interest and at the time of their death the property must be refinanced by the estate or sold to satisfy the loan. If there is no equity in the home FHA takes the home and sell it on their own and takes the loss with the mortgage insurance making up the rest.
Hope this answers your question
I am a mortgage banker in TN & KY
Prior poster is correct. A 'reverse mortgage' isn't a mortgage (death debt) at all. It is a financial instrument wherein a seller 'sells' his or her home and in lieu of a lump sum payment stays in the home for a designated number of years while receiving periodic payments of the sales price. Depending on how it is structured it may, or it may not, be a good idea.
the one program my father looked into required a minimum of 50% equity in the house. the reverse mortgage would pay off the existing mortgages [so it has uncontested first place] and then the difference between 50% and the amount already drawn is available to draw.
haven't heard of it being done at the initial purchase and maybe it is possible. Ask someone who specializes in that program [i believe the list is available from hud.gov]
GL
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 mortgage<!--without all the added fees that lenders are adding on these days. Keep reading to discover exactly what this type of loan is and what it can do for you.A reverse mortgage wholesale loan is not available directly to you.
http://mortgages-finance.awardspace.com/
This type of mortgage loan is sold to a lender at a discounted rate and the lender will add points to the rate and pass the savings on to you.There are three main-->agencies that sell reverse mortgage wholesale lender accounts. These agencies are the Federal Housing Authority, the Fannie Mae foundation and the Financial Freedom Cash Account.
Knowledge Base: Mortgage
Reverse mortgage?
October 10, 2008 - Category: Mortgage
i have found there is a ton of misunderstanding around reverse mortgages. 1. what do you think a reverse mortgage is? 2. how do you think it works? 3. why do you think it is good / bad? you must answer all three to be considered for best answer. reverse
Reverse mortgage »
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what is a reverse mortgage and how do people benefit from them?
