Reverse Mortgages

[barbara2811]

I already know how reverse mortgages work. I'd like to hear what anyone has to say about them. Good idea??? Not good idea.

[SantaClaus]

Generally, the origination fees are enough for them to not make sense, except as a last resort. Be careful.

[Bizdoc]

Have a lawyer you trust read everything first. Many include a provision which forces the sale of the home when the first person of a couple dies. And your heirs (who may look at the house as an asset of your estate) will find that the house is worth nothing to the estate.

[ganative]

Generally speaking I would stay away unless you need the funds, my mother in law did one a while ago without us knowing, when she passed away and settled the estate we got a closer look at it. Lots of up front fees(origination fees) that they took out as you first draw.

[ssmith]

also this should be your last residence before you die....and I would not want to make that commitment unless I had to.

[Challenger]

Caveat Emptor!!!!!

[villagetinker]

Along with all of the above, take a very careful look at what happens when you die. Back up North, during the housing boom, a neighbor took out a reverse mortgage for $240k. Within 2 years the money was gone, and a few months later she died, unfortunately so did the housing market....Now the house was worth LESS then the loan, and the bank wanted the difference (about $40k). They went to collect from the estate, AND from the 'heirs'!!!! This turned into a real mess. The house sat vacant for 3 years, and may very well still be vacant. The heirs had to hire lawyers, and I heard a rumor they had to declare bankruptcy to avoid paying the bank. The heirs will never get the house, which was the intent of the person that lived there. I guess they did not understand the reverse mortgage.

So just my suggestion, ask your lawyer and financial advisor to very carefully go over all of the possible scenarios to make sure you are not leaving a financial mess for your heirs.

[Challenger]

Along with all of the above, take a very careful look at what happens when you die. Back up North, during the housing boom, a neighbor took out a reverse mortgage for $240k. Within 2 years the money was gone, and a few months later she died, unfortunately so did the housing market....Now the house was worth LESS then the loan, and the bank wanted the difference (about $40k). They went to collect from the estate, AND from the 'heirs'!!!! This turned into a real mess. The house sat vacant for 3 years, and may very well still be vacant. The heirs had to hire lawyers, and I heard a rumor they had to declare bankruptcy to avoid paying the bank. The heirs will never get the house, which was the intent of the person that lived there. I guess they did not understand the reverse mortgage.

So just my suggestion, ask your lawyer and financial advisor to very carefully go over all of the possible scenarios to make sure you are not leaving a financial mess for your heirs.

from your discription, I dont believe that this case was a Reverse Mortgage.
Probably an equity loan.

[Warren Kiefer]

from your discription, I dont believe that this case was a Reverse Mortgage.
Probably an equity loan.

I agree with you. HUD has regulations to protect heirs from such an occurance.

[gatherer47]

I don't believe anything Henry Winkler says

[barbara2811]

We have been told that Reverse Mortgages are backed up by HUD and the State of Florida. No loan value greater than the outstanding loan balance would ever have to be paid. Thought it would be good just for a line of credit and hope never to use it. Which pays a nice interest rate.

[villagetinker]

Challenger and Warren,

Thank you for your comments. As this happened a few years ago, it may have been prior to any recent HUD rules, but also as I was not directly involved, I was getting some of this info second hand, so I will agree that it is possible this was some other form of loan.

However, I agree with above, I do not believe ANY of the Reverse Mortgage commercials.

[Shimpy]

A while ago I read an article in "Readers Digest" by a scam expert that has now gone straight and telling it all. He said that if he was ever going to get into scams again it would be in gold and silver coins and reverse mortages.......something to be aware of.