What do you think of reverse mortgages?
Let's say I am 65, and I get a reverse mortgage on my house. Do I get a monthly check from the mortgage holder? Will it be the same amount as a normal mortgage that I pay the bank? Or less? And how much less? And most important, what happens if I live to 75, or 85, or 95, or older?
Thanks for the help.
- ?Lv 41 decade agoBest Answer
Don't do it, I could go into a long list of reasons why but I just don't have time right now. But for starters it's going to cost a lot points up front and they'll use their own bank appraisers which will low ball you and you better have quite a bit equity in the house or it's no go. As far as the payout, it could be monthly payments or a lump sum or a combination of the two. Of course you will have to take special classes before the loan process even starts to make sure you understand why the lender is shoving it to you. The best thing you can do is to take the proposal to an attorney that you select and have him explain everything to you for a small fee. The best of luck to you.
- MaryAnnLv 44 years ago
The costs for reverse mortgages have dropped DRAMATICALLY over the last few weeks. Most lenders have eliminated the fixed rate servicing fees as well as dramatically reduced (even eliminated in some cases) the origination fee. Fixed rate products can be found with interest rates as low as 4.99% in some cases as well. Definitely check into the product further and get a quote from a respectable lender or broker. You may be pleasantly surprised at the numbers. These loans are becoming much more affordable and pricing seems to improve every week. If your parents were going to take out a fixed rate product, they could eliminate their current mortgage rates and probably receive additional money in a lump sum. There are many other payment options besides just the lump sum distribution. If money in their pocket is more valuable than continually shoveling it into their home mortgage payments every month, I'd suggest you look into it further.
- sophiebLv 71 decade ago
I never fully understood the reverse mortgage...I mean like do you get thrown out after all the money has been used up? And in these poor economic times is the cost of the house judged on the lower amount that homes are selling for now, or if the agreement once was for the higher amount is it now adjusted downward? I had a friend who insisted that his father get one of those reverse mortgages. His dad had to pay some kind of fee to have it done, and then after it began the people who held the reverse mortgage rejected it and he's now up in the air as to who he should be paying for the house and how he will get the extra money to pay back the last few payments that he got money for and spent that money.....so my resposne to you is I think reverse mortgages stink.
I don't think a reverse mortgage has anything to do with how long you live. If you run out of money from the paydown then I guess you just go to live with your kids because you would have gotten a reverse mortgage because you were in need of money (right?) so when the money runs out from the reverse mortgage the till is dry so you have to get help elsewhere.
- Diane MLv 71 decade ago
They can be very good or very bad. You can opt for a monthly check but I would never suggest that. You are better off taking a line of credit to use when needed. The bank pays off your current mortgage and you never make any payments back. Money is not due on the mortgage until you die, sell the home or move out for more than 12 months. Be aware you will be accumulating a monthly handling charge and that the interest rates are not very low and that the cost for initiating the mortgage will all be added into the final cost tobe payed back. You will never outlive your loan since they only give you about 80% of the value of your home. A lot of seniors take the whole sum and lose some of their benefits which are based on assets and income and others end up giving the money to children or blowing it on junk. If you are low income and need cash to pay your home taxes, home insurance, premium on long term care insurance, needed repairs to the home inclusing accesibility ones or pay for additional services to remain at home rather than in a nursing home, this type of mortgage can be very helpful. They are great for some situations but not good for all. Be sure that you go with one of the top three companies like Wells Fargo, Met Life or Financial Freedom and have family and friends be with you during all the discussions and paperwork.
- How do you think about the answers? You can sign in to vote the answer.
- MoeLv 61 decade ago
Reverse Mortgages are based on a percentage of the market value of your home. With the housing market the way it is now prices of houses are way low, and that will effect the amount of money you will get. You may if you are lucky get between 500 to 1000 a month, but again this based on the value of your house. How long you live does not matter. you will still get paid. It's when you die, they they will recover any amounts that they have paid out to you, including interest, and any remaining amount will then go to your heirs. There are of course fees involved in getting a reverse mortgage. And that could cost you several thousand dollars up front, so that is also something to be considered.
- goldwingLv 71 decade ago
You "sell" your house and hold the mortgage....simple as that, except there are the following caviats! You get to live in that house for as long as you live, if you die before it is paid out, your heirs recieve the money. It is truely a great deal for those strapped for cash, and fully own their homes. And of course you do not recieve the full amount the home is worth, but the trade off is worth it to many,. If you fully own your home, to not pull money from it is strange, for you are simply making someone else's life (heirs) better...why bother..they have their own lives, just as you did. No one gave me anything on this journey. All that I have, I did myself in one way or another, and I will inherit nothing in the future. Were I in that position, I would run a reverse in a second.! Unfortunately, they are hard to get today because of the uncertainty in the housing industry.
- for the timesLv 71 decade ago
I have a friend who did it. She wasn't happy right after but now that a few years have past she is. Seems that you have to pay an interest on the monthly amount they give you as a loan. That's what upset her. So check this part out.
They are betting you'll die and you are betting you'll live.Source(s): lona
- Anonymous1 decade ago
As I see it, with every check you would get the equity in your house goes down. It may not matter to you but it may lessen your estate. The unknown factor is the value of a house and recent financial activity has turned the normal upside down. I would try to find another solution or life plan.
- blues breakerLv 61 decade ago
a good rule of thumb;
if something seems to good to be true, it usually is.
i don't know alot about these reverse mortgages but they scare me. nothing is that simple
- DR WLv 71 decade ago
Another example of reverse psychology gone wrong...