Please explain how a reverse mortgage works?
My grandfather built my house in the early to mid 1920s. There has been no mortgage on the house or property in ages. My grandmother passed it on to my dad and my dad to my mom. My mom moved out of state and even tho she still holds the deed I am now raising my family here and hope to pass it on to one of my kids and so on. The problem is the upkeep on this house has been neglected and is badly in need of many major repairs we can not afford. I've thought about getting a mortgage to pay for the repairs but right now there is no way me or my mom can afford that either. Recently she mentioned she could qualify for a reverse mortgage in two years when she turns 65. She said as long as she's living nothing would be owed on that mortgage but after she dies I would be responsible for paying it off. which, I hope she has a good 15-20 years left till then and I would be in a position to afford the payments. Can someone simply explain to me how a reverse mortgage works. I can't understand all the technical and legal jargon and my mom tends to overlook the important points when it's something she wants. We desperately need to do something to get these repairs done and if it's as easy as she says I would agree to it. I would just never forgive my mom if something she did caused us to lose this house. Along with an explanation I welcome any serious suggestions of other option we may have. Thanks
- MRALv 47 years agoFavorite Answer
I had answered you last night but the Yahoo Answer system bumped me out for maintenance and everything I wrote was lost. Don't have time to write another one before it closes, but wanted to let you know that the bank DOES NOT take ownership when you get a reverse. your mom seems to be already qualified in terms of age (62), but it must be your mom's primary residence. if it is, then this may be the right loan for her BUT its a bit more complicated than I can type right now and you are welcome to email me directly.
also the repairs required may not fly for any FHA loan in that certain habitability items must be repaired before the loan can close. but depending on what it is, with a reverse mortgage you can do a set aside so that your loan can close, and they provide you the funds to fix it up over six months. but again, your mom must be 62 or older and it MUST be her primary residence. they will check records.
In the meantime, check with your local city and county government offices. some have their own one-time-only-version of a reverse mortgage meant for major home improvements - not an ongoing one like you read in the papers or TV. or local non-profit agencies like Habitat for Humanity (there may be others) that help homeowners get back on their feet. Again, it is a one time thing for making repairs only. i.e. replace the roof; or repaint the exterior. good luck.Source(s): I specialize in reverse mortgages (CA)
- 6 years ago
I will be 62 next year...I want to move to Florida and get a reverse mortgage to purchase a new house. How does it work? What does one have to do to qualify? what do they look for/at? I will be retiring next year as well and need a place to live out the rest of my life. Anyone out there know the answers to these questions please email me at pt322566 at yahoo thanks
- mildred fLv 77 years ago
This house has so many memories. But the reality is that there are a number of expensive repairs. So the problem is how to fiance this. You sell your house when you do a reverse mortgage. Then the reverse mortgage thing is really to your disadvantage financially. The company doing this gets all the financial advantages. It means you give away your house. Then future generations have to replace this money, with interest. Why should they buy what they already own?
Your only option is to do these repairs yourself. An old house has so many problems and these do not stop. Every house must be maintained and this one is no exception. You do them now or you eventually have to tear the whole thing down.
I had to sell my parents' property, and they were torn down, because of such problems with maintenance. More money than I ever expected to have would have been required. So I knew very early on that I would never be able to afford these repairs. I could do my own house, but not another house.
You know, I guess, that every house has a set lifespan. My house now has a lifespan of 55 years from the time it was built. Yours, like my parents', should be abut 100 years. So consider carefully what you decide. You may be looking at the end of this house's useful lifespan. It may not be what you want to think about, but should be considered too. How much money do any of you really have?
So I got some doors and woodwork from the old houses. Incredibly heavy real lumber, not the crap sold today. I'll make a new fireplace with this old woodwork, and a new headboard.
- Drew HLv 47 years ago
A reverse mortgage is where the loan company buys the house from you. Essentially you are slowly selling the house to the mortgage company, only they are buying it at a big discount. So at the end, when the owner of the house dies, the house becomes the property of the mortgage company. Some companies do have an option for the surviving aires to repurchase the equity in the house with interest. In the end, this is a bad idea if you want to keep the house. So, in your case I would not do it. Your only options are a mortgage on the house or a home equity line of credit, which is essentially a small mortgage.
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- RobLv 77 years ago
Does NOT work.
is great RippOFF.
Mom can NOT get reverse mortgage because she
does NOT live in property.
Mom may be able to get a HELOC -Home Equity
Line Of Credit from local bank.
But she has to qualify.
if in need of repairs - time is now to get learning
to earn more money or controlling what u have.
the house can become bad enough that it can be
Condemned and torn down by local government.
Mom (you) needs to talk to tax consultant to explain
the TAX problems with this house that will be coming.
you , spouse and Mom need to do repairs in cash.
sorry u got lots to learn b4 mom loses the house.Source(s): buyer of such houses
- 3 years ago