Reverse Mortgages

[MaddSkillz]

5 pages and you haven't set anyone straight yet, Madd. Keep trying.



If you have a house payment (outside a place like NYC where rent is the norm) as a senior, you dun goofed.
As for the RV couple, how about they sell the damn RV? Or live in that sumbitch down by the river.

Reverse mortgagees are total scam. Sure, you can talk up their "good points"...but follow me here.

How is taking a $2,000 loan from a violent loan shark a bad idea if you REALLY need that cash today no questions asked? After all, no other option has terms and conditions like a loan shark.


That's what it sounds like to me.

Worst. Comparison. Ever!

 

[poopgiggle]

So you're assuming all seniors want to sell their home because it's cheaper. After all, that's what life is all about. We all want to do the cheapest things possible, because that's what makes us all equally happy.

In case you didn't know, some people will pay for things because they want them, not because they're cheaper.

This is the dynamic that Dave Ramsey is missing. It may cost more, but it may also in fact give everything to the client that no other product could. That's for them to decide. It's their money. If it allows them to stay in their home, if it allows them to do other things they could not do. Let them do it.

Not everything in life is about saving money. If I had the money, I'd buy a Lamborghini in a heart beat. Some would call that stupid, but I sure as hell would do it!

I'm all for freedom of contract, and I support the right of seniors to do whatever they want with their hard-earned equity.

But that doesn't make them a good idea. What happens when all their equity is sold off and they're not dead yet? You qualify for RMs at 62 and people are living faaaaar longer than that these days.

 

[BadgeBunny]

Hooray BB! Funny, I never saw any response to this one.

.

Yeah ... don't think I haven't noticed that it is like I am not even here ...

But I will have to say this for him ... his lack of response just leads me to believe that my neighbor is doing the right thing by NOT getting a RM ... Ultimately I got what I came after ... which was verification from someone closer to the subject than me that my initial assessment of RMs was the right one.

 

[MaddSkillz]

Why so pricey?

I wish I could tell you... But you know how our government is. They suck at budgeting and spending and all that junk.

Also, payments are always required on a mortgage, they're just being made by the RM, correct? So, are they paying the mortgage AND sending the homeowner a check? Or do they only do RM's on homes without a current mortgage? If so, does the homeowner get to charge the RM interest? No?

No payments are required on a RM. RM's can be done homes that do have payments. Let's say you owe $25k on your current mortgage... An RM (based on your age and the appraised value of the home) will give you $50k. $25k immediately goes to pay off that mortgage and you can do with the rest of the $25k as you please. Put it in the growing line of credit (which grows at a .5 point higher than the RM was done at) and never touch it and it goes back into the estate when you die or move.

Seems like a scam to me.

Instead of just talking pie in the sky benefits, why not discuss the ups AND downs of a RM? Concrete information usually works better to convince people than vague notions of benefit.

I'm trying, but I'm getting hounded from all angles here!

 

[RidgeHunter]

I've known old farts to send dumb chain e-mails and buy thousands of dollars of merchandise from infomercials and door to door salesmen. Just because "it works for them" doesn't make it a wise decision.

I really don't see how a person in financial trouble can benefit from going further in debt, paying fees for the debt, and risking their house in the process.

Dude, it can't be that simple. I need a new RV.

They are not living outside of their means! The equity in their home is paying for it!!! That's the money THEY put there. How is using your own money for something living outside of your means???

Equity in your home is not the same as money in the bank. Just because you can borrow against it doesn't make it so. That's not "lifestyle" money. That's one of the "big 3" (food, water, shelter). Leveraging your shelter to increase your lifestyle is not living within your means by any stretch.

 

[poopgiggle]

But I will have to say this for him ... his lack of response just leads me to believe that my neighbor is doing the right thing by NOT getting a RM ... Ultimately I got what I came after ... which was verification from someone closer to the subject than me that my initial assessment of RMs was the right one.

Yeah, his entire argument so far is, "well yeah, the fees are high and compounded interest depletes equity at an exponential rate, but some people think that's an acceptable tradeoff!" Nothing about why this is a smart thing to do, just that people do it.

 

[poopgiggle]

Equity in your home is not the same as money in the bank. Just because you can borrow against it doesn't make it so. That's not "lifestyle" money. That's one of the "big 3" (food, water, shelter). Leveraging your shelter to increase your lifestyle is not living within your means by any stretch.

Also this. You're pawning your house to pay for your RV. WTF.

 

[BadgeBunny]

Yeah, his entire argument so far is, "well yeah, the fees are high and compounded interest depletes equity at an exponential rate, but some people think that's an acceptable tradeoff!" Nothing about why this is a smart thing to do, just that people do it.

Kinda like adjustable rate mortgages IMHO ... how anyone actually thinks these things are a GOOD idea is beyond me. I can see how someone in a really bad bind might go for it but it doesn't make it smart. Seems kinda predatory to me ...

 

[Shoot Summ]

The financial industry is struggling with the aging population and the lack of mortgages that will come from them. They see the equity "locked" in their houses as a gold mine.

You can sell this as a good thing as much as you want, in the end it is good for the banks and everyone in the chain that sells them. It appears to be good for the person that takes out the RM as it is the easy solution to all of their problems, it liberates them to travel and live carelessly while the bank profits nicely. They don't have to go through the agony of moving at their advanced age, nor do they have to take any steps to live within their limited means.

By golly I think we have found the solution to world hunger...

 

[Glocktogo]

I wish I could tell you... But you know how our government is. They suck at budgeting and spending and all that junk.


No payments are required on a RM. RM's can be done homes that do have payments. Let's say you owe $25k on your current mortgage... An RM (based on your age and the appraised value of the home) will give you $50k. $25k immediately goes to pay off that mortgage and you can do with the rest of the $25k as you please. Put it in the growing line of credit (which grows at a .5 point higher than the RM was done at) and never touch it and it goes back into the estate when you die or move.


I'm trying, but I'm getting hounded from all angles here!

What does the government have to do with it? Do they sell RM's? Do they fix the pricing and fees? Seems like a dodge to deflect from the real answer, which is that the sellers of RM's get a higher profit margin than lenders on regular mortgages are allowed.

So on an RM where you still owe, they pay off your debt and give you $$$ up front. When to they get to repossess your home? Is it contractually specified? If you live beyond that date, you get to move out and if your cost of living has eaten up that $25K, now you're homeless and destitute? Wow, sounds like a fantastic deal, where do I sign up?