Reverse Mortgages

[MaddSkillz]

Erm, that's what a reverse mortgage is. That's not a criticism of the practice; that's what you're basically selling to the bank in your reverse mortgage.

Also the fact that you were comparing moving costs to reverse mortgage fees is pretty hilarious.

No that's not what a Reverse Mortgage is. Equity is not lost, it's used for a purpose. It's not like a rabbit in a hat.

The fact that I'm comparing costs of one scenario over the other is hilarious? I don't think so, cost is cost is cost. There are costs in selling a home and events surrounding it. Just being realistic. Hilarious or not, those are the facts.

 

[MaddSkillz]

I thought on a reverse mortgage the company was betting against your untimely demise. If you make it to 100, you probably will have been paid back all of you equity plus some, and the reverse mortgage company will take a loss once they take possession and sell the house. Is that correct?

Common misconception. The bank does not own the house. Their is a lien on the house just like you'd have on a regular mortgage. The banks don't want the houses, they want the mortgages - forward or reverse. The seniors can sell the home at any time should they choose to do so.

 

[poopgiggle]

No that's not what a Reverse Mortgage is. Equity is not lost, it's used for a purpose. It's not like a rabbit in a hat.

Please explain to me how having a lien put on your house isn't losing equity.

I'm beginning to sense that you don't know what "equity" means, which is sort of frightening since you're advising elderly people on their financial future.

EDIT: OK, here's the definition of "home equity" from Wikipedia, which allows me to illustrate my point well

Home equity is the market value of a homeowner's unencumbered interest in their real property-that is, the difference between the home's fair market value and the outstanding balance of all liens on the property.

Sooo... Equity = FMV - Liens. How does increasing Liens not decrease Equity, unless your reverse mortgage increases the fair market value of the home? (Hint: it doesn't)

I can write out an algebraic proof if you'd like.

The fact that I'm comparing costs of one scenario over the other is hilarious? I don't think so, cost is cost is cost. There are costs in selling a home and events surrounding it. Just being realistic. Hilarious or not, those are the facts.

No I meant it's hilarious that you're comparing a low, straightforward rate for a single service to ongoing fees and compounding interest associated with a reverse mortgage.

 

[1911Sooner]

http://www.daveramsey.com/article/the-ugly-truth-of-reverse-mortgages/lifeandmoney_mortgage/


You may have heard that a reverse mortgage will give you a “lifetime income” or you’ll “never lose your home.” These misleading claims helped lenders convince nearly 115,000 people to buy one of the worst financial products out there in 2009.
Back Into Debt

Financing retirement with debt is a big mistake! You can’t win with money by going into debt—especially when you’re older.
Reverse mortgages, or Home Equity Conversion Mortgages (HECM), are available to homeowners who are at least 62 years old. The loan taps your home’s equity, and the bank gives you the money either as a lump sum, a line of credit, or a monthly draw.
You still pay for property taxes, insurance and the costs of maintaining the home. The lender can foreclose if you don’t. Also, because interest accrues over the life of the loan, your debt can ultimately exceed the value of your home.
You don’t make monthly payments, but if you sell the house or move out for more than a year, the loan is due and the income stops. If the house is sold upon your death, proceeds go to pay the loan.
Crazy Fees

Fees on a reverse mortgage are expensive and can cost you 10% or more of the loan amount. You’ll pay:

• An origination fee
• Standard closing costs
• Mortgage insurance premiums for coverage to make up the difference if your home doesn’t sell for enough to pay the loan
• A monthly mortgage insurance servicing fee
• Fees for mandatory credit counseling, which you pay whether or not you get the reverse mortgage

Interest rates on a reverse mortgage are adjustable unless you take your money in a lump sum. You are also required to take a loan for the maximum amount you qualify for.
The Lies Revealed

The U.S. Government Accountability Office last year found dozens of misleading marketing claims about reverse mortgages in materials distributed by several large lenders. We’ve already debunked the first two:

• Lifetime income – Income from a reverse mortgage stops if you sell your house or move.
• Never lose your home – You can lose your home if you can’t afford to pay taxes, insurance, or maintain the home.
• 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 isn’t sold when the loan is due.
• False implications that a reverse mortgage is a government benefit rather than a loan – Some lenders even use government logos to convince you to buy.

If you or anyone you know is considering a reverse mortgage—stop now! If money is short, cut back on your lifestyle. Sell your house and get something more affordable to free up money for your needs.

 

[BadgeBunny]

**snip**

If money is short, cut back on your lifestyle. Sell your house and get something more affordable to free up money for your needs.

That right there is the long and short of it if you want to maintain any type of security in your "golden" years, IMHO.

 

[MaddSkillz]

Please explain to me how having a lien put on your house isn't losing equity.

Call it as you want, but it's akin to saying that anything you purchase is causing you to lose money. That may be true in the simplest description but if it has value to you than it has worth.

I'm beginning to sense that you don't know what "equity" means, which is sort of frightening since you're advising elderly people on their financial future.

You're incorrect there, but you're welcome to that opinion.

No I meant it's hilarious that you're comparing a low, straightforward rate for a single service to ongoing fees and compounding interest associated with a reverse mortgage.

No, I'm simply pointing out that there are fee's associated with selling a home which you did not mention.

 

[OKCShooter]

I so can't wait to set people straight on this topic tomorrow.

http://www.daveramsey.com/article/the-ugly-truth-of-reverse-mortgages/lifeandmoney_mortgage/


You may have heard that a reverse mortgage will give you a “lifetime income” or you’ll “never lose your home.” These misleading claims helped lenders convince nearly 115,000 people to buy one of the worst financial products out there in 2009.
Back Into Debt

Financing retirement with debt is a big mistake! You can’t win with money by going into debt—especially when you’re older.
Reverse mortgages, or Home Equity Conversion Mortgages (HECM), are available to homeowners who are at least 62 years old. The loan taps your home’s equity, and the bank gives you the money either as a lump sum, a line of credit, or a monthly draw.
You still pay for property taxes, insurance and the costs of maintaining the home. The lender can foreclose if you don’t. Also, because interest accrues over the life of the loan, your debt can ultimately exceed the value of your home.
You don’t make monthly payments, but if you sell the house or move out for more than a year, the loan is due and the income stops. If the house is sold upon your death, proceeds go to pay the loan.
Crazy Fees

Fees on a reverse mortgage are expensive and can cost you 10% or more of the loan amount. You’ll pay:

• An origination fee
• Standard closing costs
• Mortgage insurance premiums for coverage to make up the difference if your home doesn’t sell for enough to pay the loan
• A monthly mortgage insurance servicing fee
• Fees for mandatory credit counseling, which you pay whether or not you get the reverse mortgage

Interest rates on a reverse mortgage are adjustable unless you take your money in a lump sum. You are also required to take a loan for the maximum amount you qualify for.
The Lies Revealed

The U.S. Government Accountability Office last year found dozens of misleading marketing claims about reverse mortgages in materials distributed by several large lenders. We’ve already debunked the first two:

• Lifetime income – Income from a reverse mortgage stops if you sell your house or move.
• Never lose your home – You can lose your home if you can’t afford to pay taxes, insurance, or maintain the home.
• 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 isn’t sold when the loan is due.
• False implications that a reverse mortgage is a government benefit rather than a loan – Some lenders even use government logos to convince you to buy.

If you or anyone you know is considering a reverse mortgage—stop now! If money is short, cut back on your lifestyle. Sell your house and get something more affordable to free up money for your needs.

Looks like things have been "set straight".

Hopefully your "MadSkillz" are not in Finance.

 

[MaddSkillz]

http://www.daveramsey.com/article/the-ugly-truth-of-reverse-mortgages/lifeandmoney_mortgage/


You may have heard that a reverse mortgage will give you a “lifetime income” or you’ll “never lose your home.” These misleading claims helped lenders convince nearly 115,000 people to buy one of the worst financial products out there in 2009.
Back Into Debt

Financing retirement with debt is a big mistake! You can’t win with money by going into debt—especially when you’re older.
Reverse mortgages, or Home Equity Conversion Mortgages (HECM), are available to homeowners who are at least 62 years old. The loan taps your home’s equity, and the bank gives you the money either as a lump sum, a line of credit, or a monthly draw.
You still pay for property taxes, insurance and the costs of maintaining the home. The lender can foreclose if you don’t. Also, because interest accrues over the life of the loan, your debt can ultimately exceed the value of your home.
You don’t make monthly payments, but if you sell the house or move out for more than a year, the loan is due and the income stops. If the house is sold upon your death, proceeds go to pay the loan.
Crazy Fees

Fees on a reverse mortgage are expensive and can cost you 10% or more of the loan amount. You’ll pay:

• An origination fee
• Standard closing costs
• Mortgage insurance premiums for coverage to make up the difference if your home doesn’t sell for enough to pay the loan
• A monthly mortgage insurance servicing fee
• Fees for mandatory credit counseling, which you pay whether or not you get the reverse mortgage

Interest rates on a reverse mortgage are adjustable unless you take your money in a lump sum. You are also required to take a loan for the maximum amount you qualify for.
The Lies Revealed

The U.S. Government Accountability Office last year found dozens of misleading marketing claims about reverse mortgages in materials distributed by several large lenders. We’ve already debunked the first two:

• Lifetime income – Income from a reverse mortgage stops if you sell your house or move.
• Never lose your home – You can lose your home if you can’t afford to pay taxes, insurance, or maintain the home.
• 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 isn’t sold when the loan is due.
• False implications that a reverse mortgage is a government benefit rather than a loan – Some lenders even use government logos to convince you to buy.

If you or anyone you know is considering a reverse mortgage—stop now! If money is short, cut back on your lifestyle. Sell your house and get something more affordable to free up money for your needs.

David Ramsey if free to have his opinion... But he's very much incorrect on the topic of RM's.

 

[MaddSkillz]

Looks like things have been "set straight".

Hopefully your "MadSkillz" are not in Finance.

Oh geez, you're gonna make me go line by line on that stuff aren't ya?

Such the judgmental crowd we have here today!

 

[poopgiggle]

Seriously MaddSkillz, you're in a bad racket.

I know your background is in IT, not finance, and you just got into selling these, so my guess is that you believe what you're saying and you're not trying to screw pensioners out of their money. I'm just asking that you look beyond the sales pitch and look into why so many well-respected financial writers/advisers keep saying these are a scam.