October 10, 2008 - Because it is not a loan that will ever be paid off, and the equity will soon be used up in these expensive days. I have 100,000 or so equity in my house, and I'd rather sell it ...
Responses:
A Reverse Mortgage is a loan program that enables senior homeowners, to use their homes equity without selling their home or moving. A lending institution makes a check out to the homeowners each month on a "reverse amortization schedule" (or makes a lump sum payment from equity). This payment is really a loan against the value of a home. Because the payment is a loan, it is tax-free when the homeowners receive it. These loans are non-recourse loans with loan to value (LTV) as high as 75% of the appraised value of the home. ... ... There are a variety of Reverse Mortgage products out there. Some require compulsory consumer education programs.
From Investopedia: ... A type of mortgage where homeowners can borrow money against the value of their home. No repayment of the mortgage (principal or interest) is required of the borrower(s) until the borrowers are deceased or the home is sold. After accounting for the initial mortgage amount, the rate at which interest accrues, the length of the loan and rate of home price appreciation, the transaction is structured so that the loan amount will not exceed the value of the home over the life of the loan. ... ... Often, the lender will require that there can be no other liens against the home. Any existing liens must be paid-off through the proceeds of the reverse mortgage. ... ... Reverse mortgage is a method of receiving income that people can tap into for their retirement. The advantage of a reverse mortgage is that the borrower's credit is not relevant, and is often unchecked, since the borrower does not need to make any payments. As the home serves as collateral, it must be sold in order to repay the mortgage when borrower dies (in some cases, the heirs have the option of repaying the mortgage without selling the home). These types of mortgages have large origination costs relative to other types of mortgages. These costs become part of the initial loan balance and accrue interest. Senior citizen borrowers with good credit should carefully analyze the options of a more traditional mortgage, such as a home equity loan, against a reverse mortgage.
My understanding it that they [mortgage com] will pay the homeowner a certain amt of $ per month on your house you have lived in "forever." Sounds too good to be true because sounds like "free $]. Fact is, however that all on the reverse mortgage comes due upon your death and/or if you move. If you don't mind leaving the "burden" [ie...pmts, house...etc.. for your kids to deal w/ it seems like a fairly good deal]. MUST make sure you're in w/ an honorable mortgage company however.......k- I am quite convinced that it's a ripoff by people who want to take your money. Preserve your equity.
Because it is not a loan that will ever be paid off, and the equity will soon be used up in these expensive days. I have 100,000 or so equity in my house, and I'd rather sell it and move to someplace either with my equity.. that is cheaper to maintain and live in than this one is. Or, sell the house, with the right to remain there until death takes over and use the money without a loan, to take care of yourself. ... It just seems like another way to get older people's money away from them. Anything that sounds this 'good' has to have a kicker.
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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Is there a reverse mortgage available for people less than 62 years old?
what is a reverse mortgage and how do people benefit from them?
