Just pay cash for your house and then you don't have to worry about it.
So Madd, I got a question.
From the Dave Ramsey summary:
The U.S. Government Accountability Office last year found dozens of misleading marketing claims about reverse mortgages in materials distributed by several large lenders. Weve already debunked the first two:
* Never owe more than the value of your home If your loan exceeds the value of your home, you or your heirs will have to make up the difference if the home isnt sold when the loan is due.
Do the heirs of the estate become responsible? Because I just don't see how they could be held liable for debt that someone else signed up for.
I can see that a RM would be a quite attractive deal to someone who has no heirs. But to me it seems like the RM companies are horning in on people's inheritance.
From the Dave Ramsey summary:
The U.S. Government Accountability Office last year found dozens of misleading marketing claims about reverse mortgages in materials distributed by several large lenders. Weve already debunked the first two:
* Never owe more than the value of your home If your loan exceeds the value of your home, you or your heirs will have to make up the difference if the home isnt sold when the loan is due.
Do the heirs of the estate become responsible? Because I just don't see how they could be held liable for debt that someone else signed up for.
I can see that a RM would be a quite attractive deal to someone who has no heirs. But to me it seems like the RM companies are horning in on people's inheritance.
Damn, I'm slow today ... You quoted before I edited ... lol
So Madd, I got a question.
From the Dave Ramsey summary:
The U.S. Government Accountability Office last year found dozens of misleading marketing claims about reverse mortgages in materials distributed by several large lenders. Weve already debunked the first two:
* Never owe more than the value of your home If your loan exceeds the value of your home, you or your heirs will have to make up the difference if the home isnt sold when the loan is due.
Do the heirs of the estate become responsible? Because I just don't see how they could be held liable for debt that someone else signed up for.
I can see that a RM would be a quite attractive deal to someone who has no heirs. But to me it seems like the RM companies are horning in on people's inheritance.
I can answer that. IF the heirs have to probate the estate then the ESTATE will have to make up the difference. So, yeah, technically the heirs would lose whatever inheritance they might have had that is equal to the deficiency of the RM.
Now whether a home being leveraged in a RM requires a probate of an estate (and it seems to me the bank would place a requirement in the fine print to protect itself) I am unsure of.
From what I have heard this may be OK for someone on a fixed income IF they manage the fees and rates of the RM to respectable level and they have no other option. It seems that this is an opportunity for some to use predatory practices at the expense of the homeowner.
This is a huge change from the way most of us were raised. I have always been focused on paying off the house, and have paid off 2 in my short life rolling the equity into the subsequent house. With the RM you are cashing out the equity in the house, not unlike a 2nd mortgage except there is no payment for the RM. I've also been of the mind that a 2nd was a bad thing as well, but that is just me.
The challenge for the person with the fixed income is managing the spending of the RM funds, probably not wise to go crazy and splurge......
OK ... that's kind of what I thought. Thanks.
Well that makes sense. I can see the estate being liable, but in these days and times I would not be surprised in the least if they went after the heirs to get their money. Mortgage companies can be like credit card companies and the IRS these days.
And yes, I'm wondering if a home is owned by a Trust free and clear what they would do. Probably attach the lien to the whole Trust? Dunno....
Not a fan of the RM but I would rather see a retired person live comfortably than be constantly concerned about paying the bills while living in a house they worked hard to pay for. Screw the kids, they can make it without an inheritance.
It seems that my generation is more aware of retirement savings plans and investing than our parents and grandparents were, so hopefully, the RM business will be short lived.
It seems that my generation is more aware of retirement savings plans and investing than our parents and grandparents were, so hopefully, the RM business will be short lived.
They didn't have RMs when I was doing probate and trust law so I really don't know except to say I have never ever seen a bank or mortgage company not go to the nth degree to protect their interest. Buyer should always beware, regardless of the instrument they are considering purchasing from a lender.
+1
Reverse mortgages are like payday loans for senior citizens. If you're smart with your money you'll never need one.
