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My house has been paid off since 1996, I'm 74 and retired, well, semi-retired. I've been thinking about a reverse mortgage and have checked out a few. I'm just looking for folks that HAVE ACTUALLY DONE IT. I really don't need any opinions what  I need are facts from actual RM customers please!B)

 

Much Obliged

Rye

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I once rented a house to a girl whose mother had taken out the reverse mortgage but did not put her husband on the loan.  She died so the husband was evicted as the mortgage company took it per the loan agreement so my tenant had to move in with her dad elsewhere so they could afford a place to live.  If you do.it, i guess make sure everyone is on the loan.  

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Yea my two sons are on my will so they would be on the loan as well. They’re telling me to do this and don’t worry about leaving anything!

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My wife's girlfriend says this was a nightmare for her as an heir.

Her father did the reverse mortgage and drank the money.
His son (her brother) didn't have a pot to pee in, and needed a place to live.
She said getting it untangled and managing the resulting debt was a nightmare.

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Ok.  Ok.  Ok.  I am aware this missive doesn't help the OP at all.  NOT one little bit.  BUT!!  If your house is Paid Off . . . It's YOURS . . . NO house payment.  Nothing but a little property tax, WHY on earth would you want to burden yourself with HOUSE PAYMENTS.  Especially with being RETIRED.

 

Think about it Rye.  Think about it really HARD!!!

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22 hours ago, Colorado Coffinmaker said:

 

Ok.  Ok.  Ok.  I am aware this missive doesn't help the OP at all.  NOT one little bit.  BUT!!  If your house is Paid Off . . . It's YOURS . . . NO house payment.  Nothing but a little property tax, WHY on earth would you want to burden yourself with HOUSE PAYMENTS.  Especially with being RETIRED.

 

Think about it Rye.  Think about it really HARD!!!

A Reverse Mortgage does not have payments during your lifetime as long as you live up to the agreements.

 

 

Edited by Marshal Mo Hare, SASS #45984
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2 hours ago, Colorado Coffinmaker said:

 

Ok.  Ok.  Ok.  I am aware this missive doesn't help the OP at all.  NOT one little bit.  BUT!!  If your house is Paid Off . . . It's YOURS . . . NO house payment.  Nothing but a little property tax, WHY on earth would you want to burden yourself with HOUSE PAYMENTS.  Especially with being RETIRED.

 

Think about it Rye.  Think about it really HARD!!!

No house payments, they pay you for your house and you can stay in it until you die . 

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OK.  Alright.  I stand corrected.  NO house payments.  I just can't wrap my head around "free" money :rolleyes:

 

See??  My other missive really didn't provide help to the OP.  None atall.

 

Sorry Rye.  Best intentions and all that :)

Edited by Colorado Coffinmaker
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1 hour ago, Ezra Hawthorne said:

It's totally different if you don't have a mortgage. I've know 3 folks that have done this and it worked out okay for them. In one case the guy died and his son bought the house back from the reverse mortgage company. Of course they made money on the deal but the owner got payments of around 2K a month until about 5 years before he passed away. He stayed in the house until the end.

 

Dave Ramsey knows his stuff for sure but the examples he used were people that had debt owed. My situation is totally different.

 

Thanks for the info though! Interesting!

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4 hours ago, Marshal Mo Hare, SASS #45984 said:

A Reverse Mortgage does not have payments

This is true, but while I was working I helped in the foreclosure of  a bunch of reverse mortgages for failure to pay the property taxes and/or insurance, and/or where the owner had to move out to go to a nursing home.  Failure to abide by the requirements to occupy the home, pay the property taxes and maintain the homeowner's insurance will trigger a default that can lead to  foreclosure.

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In that yotube video of Dave Ramsey he says they would give you 57k on a house appraised at 100k!! No way I would do that!! 

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I have not done this, however, I have looked into it.

You need to talk, face to face, with some folks that have done this, and find out the pros, and the cons of doing this.

 

Yes, you get some money.

Yes, this is a loan.

Yes, you get a lien on your property.

Yes, the loan has to be paid back, or the house will be sold to pay back the loan, at some point in linear time.

 

One has to ask one's self, if they need the money that bad?

 

Bottom line...it may work better for some, than for others. There ARE negatives in doing this, and you need to find out what they are, and you need to think about if you can live with the negatives, or are the negatives that bad, in your case!!!

 

DO NOT talk exclusively with the folks that are doing reverse mortgages for a living.

Talk to folks that have done this, and are involved in doing this, right now, that are NOT a part of the reverse mortgage companies. Try to talk to folks that are doing this, that have a similar situation as you do. That way you can better gauge what you may encounter. 

 

DO NOT rush into doing this. Take your time, and do your homework. 

 

Remember the old saying...."Act in haste, repent in leisure". 

 

W.K. 

 

 

 

 

 

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I never took out a RM but from what I have observed.

 

with an RM  they want to lend you money monthly planning to get it back with interest sometime in the future,  

 

if you don’t need the income, a home equity line of credit will allow you to control the rate of your borrowing and the amount that is owed on the property at your demise.

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Posted (edited)
10 minutes ago, Marshal Mo Hare, SASS #45984 said:

I never took out a RM but from what I have observed.

 

with an RM  they want to lend you money monthly planning to get it back with interest sometime in the future,  

 

if you don’t need the income, a home equity line of credit will allow you to control the rate of your borrowing and the amount that is owed on the property at your demise.

You don’t have to pay the money back if you don’t want but they get the house. You do get to stay in it until you die though, like I said I know a couple old gentlemen that did it. I’m not sure exactly what they got for their homes.

Edited by Rye Miles #13621
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The top amount you can receive is about 62% of your equity.

You’ll need for the value of the property to increase at a greater rate than the interest rate in order to keep the interest from eating up your remaining equity.

 

 If you intend for your heirs to get anything out of the property at your passing, this is probably NOT the best avenue to take!!

 

We borrowed against the equity in our home to build the shop, make improvements in the house, and to get a little joy out of our labors.  We STILL owe less than half of the value of the property, our mortgage interest rate is around 1/3 of that of the previous mortgage, the payment is not a lot more than our previous monthly note, and we’re comfortable on a mostly fixed income!

 

As it was, the RM wouldn’t have given us the amount we wanted/needed and when it’s all said and done, WE STILL own all of the equity ourselves!!  If you’re committed to a reverse mortgage, you’ll have major difficulties accessing that equity!!

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16 minutes ago, Blackwater 53393 said:

The top amount you can receive is about 62% of your equity.

You’ll need for the value of the property to increase at a greater rate than the interest rate in order to keep the interest from eating up your remaining equity.

 

 If you intend for your heirs to get anything out of the property at your passing, this is probably NOT the best avenue to take!!

 

We borrowed against the equity in our home to build the shop, make improvements in the house, and to get a little joy out of our labors.  We STILL owe less than half of the value of the property, our mortgage interest rate is around 1/3 of that of the previous mortgage, the payment is not a lot more than our previous monthly note, and we’re comfortable on a mostly fixed income!

 

As it was, the RM wouldn’t have given us the amount we wanted/needed and when it’s all said and done, WE STILL own all of the equity ourselves!!  If you’re committed to a reverse mortgage, you’ll have major difficulties accessing that equity!!

62 % of my house value would not be worth it!

 

I’m gonna pass on this idea and just keep working part time as long as I can. Tuning pianos is not ditch digging! It’s pretty good money too!;)

Thanks to everyone for your comments, I know a lot more than I did yesterday!!

;)

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9 hours ago, Blackwater 53393 said:

The top amount you can receive is about 62% of your equity.

You’ll need for the value of the property to increase at a greater rate than the interest rate in order to keep the interest from eating up your remaining equity.

That is only true if you take the entire loan amount out immediately.

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Posted (edited)
6 hours ago, Marshal Mo Hare, SASS #45984 said:

That is only true if you take the entire loan amount out immediately.

True, which would be the thing to do so you can invest it. It's still a rip-off though, 57%-62% of say a 100K house is a rip off!

Edited by Rye Miles #13621
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3 minutes ago, Rye Miles #13621 said:

True, which would be the thing to do so you can invest it. It's still a rip-off though, 57%-62% of say a 100K house is pretty darn high interest!

62% is not the interest rate, it’s the percentage that you are allowed to borrow.

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22 hours ago, Marshal Mo Hare, SASS #45984 said:

A Reverse Mortgage does not have payments

Yes they do!  One massive one (the whole house) on the mortgage due date (your death).

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2 minutes ago, Matthew Duncan said:

Yes they do!  One massive one (the whole house) on the mortgage due date (your death).

Ok edited my post.

 

Quote

A Reverse Mortgage does not have payments during your lifetime as long as you live up to the agreements.

 

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14 hours ago, Rye Miles #13621 said:

62 % of my house value would not be worth it!

 

I’m gonna pass on this idea and just keep working part time as long as I can. Tuning pianos is not ditch digging! It’s pretty good money too!;)

Thanks to everyone for your comments, I know a lot more than I did yesterday!!

;)

 

How about selling the house?  You get full value and with today's market more than full value.  Then rent a place to live.  You have the money form your house sell sitting in the bank to do with as you see fit.

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I was thinking as above as well if you were on moving….sell it at a great price and maybe identify what you would want or need in an “improved” current set up.  Maybe a location change or maybe no yard work set up etc.  this would be much simpler I believe and depending on where at you may be surprised how much you could get right now.  Instead of getting 62% you could be getting 120% of current value with things going over asking prices.  

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Posted (edited)
1 hour ago, Marshal Mo Hare, SASS #45984 said:

62% is not the interest rate, it’s the percentage that you are allowed to borrow.

Yea I know that, I said that wrong! I fixed it! :lol:

1 hour ago, Matthew Duncan said:

 

How about selling the house?  You get full value and with today's market more than full value.  Then rent a place to live.  You have the money form your house sell sitting in the bank to do with as you see fit.

That's an option!!

Edited by Rye Miles #13621
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It is not for everybody for sure. 

 

My sister's husband got one on the house he owned (with a mortgage). When he and my sister tied the knot, he owned the home. He did not put her name on the deed. After 20 years, he passed away and the mortgage company told her she had to get out. I hired a lawyer friend to see if he could mitigate the matter with the mortgage company. He finally got them to agree that my sister could stay as long as the house was put up for sale. They also agreed that because my sister had contributed to the mortgage payments, she could use some of the money from the sale to purchase a new home. She bought a mobile home in a mobile home park and paid cash with the sale money. The only stipulation is that if she ever sells it or dies, the title goes to her deceased husbands children (they were from a previous marriage). She has been in the home for 18 years.

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On 7/14/2021 at 3:57 PM, Waxahachie Kid #17017 L said:

 

You need to talk, face to face, with some folks that have done this, and find out the pros, and the cons of doing this.

 

Yes, you get some money.

Yes, this is a loan.

Yes, you get a lien on your property.

Yes, the loan has to be paid back, or the house will be sold to pay back the loan, at some point in linear time.

 

One has to ask one's self, if they need the money that bad?

 

 

All of this is absolutely true.  I want to extend the benefit of my experience in the foreclosure practice.  

 

Imagine this scenario.  You have a house with a very small or paid off mortgage.  It's your major asset.  You hope to able to leave the house to your children or grandchildren.   You take out a reverse mortgage, which by the nature of the beast has a low Loan to Value (LTV) ratio.  As no payments are made on the loan, the equity gets converted to debt each year by the accumulated interest.  And of course, you start spending the loan proceeds for one thing or another.

 

Three years later, your health takes a turn for the worse and you can't live by yourself in the house anymore.  You move in with one of your kids or a nursing home.  Thirty-one days later, because you no longer occupy the property, the reverse mortgage, with its increased secured debt, is in default and the outstanding debt is accelerated (a fancy term for "pay it all right now").  You don't have the cash to pay the mortgage in full and neither do your kids.  The lender refers the mortgage to someone like my old employer for foreclosure.  

 

The foreclosure firm sends out the necessary notices and eventually the auctioneer and a representative for the lender (like me) are standing on the courthouse steps to conduct the foreclosure sale.  In the crowd are the bargain hunters and professional flippers.  The lender establishes an opening bid of the "Upset Price" (unpaid loan balance, accumulated interest, cost of sale, unpaid property taxes etc.).  If the flippers and bargain hunters don't bid, the lender becomes the buyer and after ratification of the sale will become the owner of the property.   The flippers or bargain hunters may see a chance to get a good deal on the property because of the relatively low upset price established by the low LTV ratio, bid in  and end up becoming the owner of the property.  Even with the intervention of the Bankruptcy Courts,  unless there was a significant bidding war at the sale, the eventual upshot is the borrower and his heirs basically lose the property and come away with nothing. 

 

Does this happen every time?  Probably not.  But I stood on the courthouse steps for a lot of sales in my last job.

 

 

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