Reverse Mortgages

[Glocktogo]

OMG man! Every RM I did they they put the money in the growing line of credit. Every single one, over the span of the few years I was involved in the industry.

I can tell you, based on your questions you're really behind the curve on this subject. And I don't mean that as a dig, but you're throwing some pretty harsh words my way and they're baseless, really.

You want to me to come with the answer for if someone lives to be 120 years old? Would their name also happen to be Gandolf?

You're not doing anything to allay my concerns! All you're doing is saying they're pie in the sky great and not backing anything up. I'd expect that from an uninformed person, but not someone who was intimately involved in the process.

So it was placed in a LOC. What percentage of RM borrowers KEEP that money in the LOC?

 

[MaddSkillz]

You're not doing anything to allay my concerns! All you're doing is saying they're pie in the sky great and not backing anything up. I'd expect that from an uninformed person, but not someone who was intimately involved in the process.

So it was placed in a LOC. What percentage of RM borrowers KEEP that money in the LOC?

I don't have those numbers. But in my experience and based on what I saw from my co-worker, I'd say the vast majority go with the LOC. And I'm talking 90%. As far as keeping it in there... I don't know. That would have to analyzed over a few years time at least. But I do know that there are those who just wanted it there for an emergency or a rainy day fund.

Also consider that they can put funds in the LOC, take monthly payments and also get a lump sum.

A lot of folks got a small lump sum up front and put the rest in the LOC to draw on when they wanted...

Also, the interest only accrues on the money they use. If they get a RM for $50k but put $25k in the LOC, interest is only accruing on the $25k they borrowed. Whatever is in the LOC is growing at a half a point higher than the interest rate on the RM.

Does that answer your question?

Sorry, but this isn't exactly the simplest subject of discussion for the interwebz. I'm trying to be poignant as I can.

 

[Glocktogo]

I don't have those numbers. But in my experience and based on what I saw from my co-worker, I'd say the vast majority go with the LOC. And I'm talking 90%. As far as keeping it in there... I don't know. That would have to analyzed over a few years time at least. But I do know that there are those who just wanted it there for an emergency or a rainy day fund.

Also consider that they can put funds in the LOC, take monthly payments and also get a lump sum.

A lot of folks got a small lump sum up front and put the rest in the LOC to draw on when they wanted...

Also, the interest only accrues on the money they use. If they get a RM for $50k but put $25k in the LOC, interest is only accruing on the $25k they borrowed. Whatever is in the LOC is growing at a half a point higher than the interest rate on the RM.

Does that answer your question?

Sorry, but this isn't exactly the simplest subject of discussion for the interwebz. I'm trying to be poignant as I can.

That is better information than your previous posts, thank you.

 

[Shadowrider]

I don't know about that, most of my grandparents generation that I grew up around were smarter with their money than my parents generation.... snipped

Anybody have any numbers on this?...snipped

This thread got me to thinking. And I was trying to remember if my grandfather ever had a loan? I can't remember in my lifetime that he ever did once he paid off his first house which was before my first memory and possibly before I was even born.

He learned the lesson of money management during the great depression. He had a job paying about $7 a week and many people were quite envious of it. He was sure glad to have it, I know that. One day he and a cousin were out horsing around and somehow the cousin ran over his foot with the car tire. We wasn't able to work with several broken bones in his foot and there was no such thing as disability, unemployment, etc. This also cost him being able to serve in WWII. He volunteered but they wouldn't admit him because of damage to his foot.

But in all of my memory he paid cash for EVERYTHING he bought. If he didn't have enough, he waited and saved up for it.

 

[1911Sooner]

We all need to live like our Grandparents did before there was credit. We do not work for Congress so we should not be spending more than we make. If the Country was debt free the world would be a better place.

 

[finnimus]

I disagree with the statement that people should live debt free. There are some very good uses for debt and credit, especially for business purposes. Just because there are those who misuse credit products does not make them a bad thing.

 

[dlbleak]

wow, what a response. i should have mentioned that she is still able to put away around $500 every month. she just feels that she would be more secure knowing she had no house payment and money coming in. my wife and i have tried to explain to her that the monthly money she is receiving is hers that she's already paid on the house!
i've tried to explain to her that this is just a bad idea and should be used as an absolute last resort. in fact,selling the house before an RM is a better idea.

 

[BadgeBunny]

wow, what a response. i should have mentioned that she is still able to put away around $500 every month. she just feels that she would be more secure knowing she had no house payment and money coming in. my wife and i have tried to explain to her that the monthly money she is receiving is hers that she's already paid on the house!
i've tried to explain to her that this is just a bad idea and should be used as an absolute last resort. in fact,selling the house before an RM is a better idea.

You might make sure she knows that even if she doesn't have the house payment my understanding from what I have read is she will still be responsible for the insurance and property taxes. Also the maintenance will still be her responsibility.

While MaddSkillz may be right and this may be a viable option for some, depending on what they need the money for, I just happen to believe that there has got to be a better way to find the security she seeks.

Also, while it doesn't affect your Social Security benefits it may affect future Medicaid benefits. AND whose to say the .gov won't change the rules on any of this anyway ... anything the .gov has a hand in has a way of being awfully "fluid" anymore ...

 

[inactive]

So there's no fee's involved in selling the house? What about moving? How much will that cost?

Seems like you're making some unfair comparisons. The reality is there's many fees involved in selling a home.

The comparison is fair when you realize the rent rate in most cities is far less than the cost of a mortgage payment. There are fees in selling a home, sure. Less if you can keep a Realtor out of the equation. But selling the home you get out from under the mortgage payment and into an affordable rent payment. As others have said, a retired senior with a house payment has already failed at financial planning. The home is just physical property - nothing magical about it. Realize this, sell the darn thing and get into something you can afford.

If the home is paid for and there was some windfall debt amount that suddenly came up, I would rather take a mortgage out on the home to cover the bills and simply pay back the mortgage payments using the lump sum I received from the mortgage.

I won't call a reverse mortgage a scam or anything, but I think there are other options that better serve people's financial needs.

Oh, and I have moved several times in the last 5 years. Most recently, I moved a three bedroom house complete with appliances the 120 miles from Moore to OKC. Actually, I paid movers to do it all. I was out less than a grand.

 

[Shadowrider]

wow, what a response. i should have mentioned that she is still able to put away around $500 every month. she just feels that she would be more secure knowing she had no house payment and money coming in. my wife and i have tried to explain to her that the monthly money she is receiving is hers that she's already paid on the house!
i've tried to explain to her that this is just a bad idea and should be used as an absolute last resort. in fact,selling the house before an RM is a better idea.

Does she understand that your wife and any other heirs will likely get nothing out of the house when she's gone? That's where I think alot of seniors are confused by the "spin" the companies put into their marketing.