is there a minimum loan amount in a reverse mortgage?
My dad wants to take out a lump sum of like 4 grand or 5 grand maybe 10 grand at most. We own the house, I want to talk him out of it, this was one of his questions. Also if you can supply me with a whole bunch of really good reasons why this is a bad idea, that would be great. Thank you!
- LandlordLv 71 decade agoFavorite Answer
He wants a home equity loan, not a reverse mortgage.
In a reverse mortgage the bank basically buys the home from you with monthly payments. They do not just give you some money and not expect it back.
Because he wants so little a personal loan would be easier then a second mortgage.
- frak1a12345Lv 61 decade ago
I agree with the above posters. It is a better deal to get a HELOC because the up front costs of a reverse mortgage are pretty steep. If your father can't pay the loan back and has to go with a reverse mortgage then he should probably go with a version that is more like a credit line in that he can pull out what he wants and let the rest of the loan sit unused. Check out reverse mortgages because there is 3 ways to get money out. Everybody thinks of a steady monthly payment but you can also get a lump sum or else draw out bits of money as needed. The last option might fit your father. Pay particular attention to the costs because they are higher than a conventional mortgage and be aware of the limitations of what you can do with the real estate once you have the reverse mortgage.
- Anonymous1 decade ago
I'm always amazed on what bad advice people give on here!
People are answering this question and saying your Dad should get an equity line and they don't even know if he has the credit to get a equity line, if he has the ability to pay back a equity line or anything else.
A reverse mortgage is typically used by a senior that has limited income and assets and needs to get a reverse mortgage.
A reverse mortgage can be taken as a lump sum, monthly payments, as needed or any combination of the above.
If your Dad is looking at a reverse mortgage maybe its because he doesn't have the income, credit scores or assets to qualify for a traditional mortgage or equity line. Or maybe he likes the ideal of never making another house payment for the rest of his life.....
Everyone is so quick to knock something they don't understand or don't know the true facts about.
If you have any real questions please email me and I will answer them for you.
All the best!Source(s): I have been a mortgage broker for eight years and have done pleanty or reverse mortgages for clients that have wanted and needed reverse mortgages!!!!!!!!!!!!!!!!!!!
- chatsplasLv 71 decade ago
Who is we? Are you in title?
If he wants a lump sum then he should take out a HELOC rather than a reverse mortgage. RM give you a monthly payment, not a lump sum. A Home Equity loan or home equity line of credit gives you a lump sum, secured by the house, and YOU pay it back monthly. Read the other posts in your first question.
WHY do you want to talk him out of it???