Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
"Putting Your Mortgage in Reverse"
Old 11-13-2006, 09:53 PM   #1
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,616
"Putting Your Mortgage in Reverse"

We've mentioned reverse mortgages in passing, but here's a good summary from the Sunday WSJ.

"The Federal Housing Administration insured 74,412 "home equity conversion" mortgages during the year ended Sept. 30, compared with 43,082 the previous year, according to the Department of Housing and Urban Development. Nearly half of all FHA reverse mortgages have been originated in the last two years."
__________________

__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: "Putting Your Mortgage in Reverse"
Old 11-14-2006, 06:31 AM   #2
Full time employment: Posting here.
 
Join Date: Oct 2002
Posts: 717
Re: "Putting Your Mortgage in Reverse"

The article was informative, but I tried the calculator referenced, and I am more confused than ever. I would guess the reverse mortgage will get alot cheaper, more competitive, and alot more transparent to the customer in the next few years. The concept interests me, having a good portion of my net worth in a house.
__________________

__________________
Random Reinforcement is Highly Addictive.
riskadverse is offline   Reply With Quote
Re: "Putting Your Mortgage in Reverse"
Old 11-14-2006, 06:49 AM   #3
Thinks s/he gets paid by the post
tryan's Avatar
 
Join Date: Mar 2005
Posts: 2,449
Re: "Putting Your Mortgage in Reverse"

Quote:
costs for a 74-year-old borrower in a $250,000 home in May 2006 could be about $25,000 -- not including interest. For that, the homeowner could draw about $1,000 in monthly payments.
Yikes! 10 % can go to fees! Yup we need some competition in this industry.
__________________
FIRE'd since 2005
tryan is offline   Reply With Quote
Re: "Putting Your Mortgage in Reverse"
Old 11-14-2006, 07:48 AM   #4
 
Posts: n/a
Re: "Putting Your Mortgage in Reverse"

I also ran the Calculator with some fictitious numbers. Someone help me out reading this result. Are there 3 diff. programs with cash payouts of $122K, $54K and 138K? If so why the big Diff?

I don't get it!


__________________
  Reply With Quote
Re: "Putting Your Mortgage in Reverse"
Old 11-14-2006, 08:47 AM   #5
Full time employment: Posting here.
 
Join Date: Feb 2006
Posts: 987
Re: "Putting Your Mortgage in Reverse"

Some more calculators/information - FYI...

http://www.aarp.org/money/revmort/
__________________
rs0460a is offline   Reply With Quote
Re: "Putting Your Mortgage in Reverse"
Old 11-14-2006, 10:27 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Mar 2006
Location: Houston
Posts: 2,155
Re: "Putting Your Mortgage in Reverse"

It's horribly bad from a financial point of view. I think the people who use this "Reverse Mortgage" do so for emotional reasons.
__________________
Sam is offline   Reply With Quote
Re: "Putting Your Mortgage in Reverse"
Old 11-14-2006, 10:32 AM   #7
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,616
Re: "Putting Your Mortgage in Reverse"

Quote:
Originally Posted by Sam
It's horribly bad from a financial point of view. I think the people who use this "Reverse Mortgage" do so for emotional reasons.
It's a small market where one or two players can set the rates and rake in as much as they can handle. The fact that it's doubled in the last year means eventual competition & consolidation that'll drive down their margins and make them a better deal for consumers (although not a great deal).

I think the people buying reverse mortgages do it for the running-out-of-money, afraid-of-outliving-their-portfolio, and can't-go-back-to-work reasons. It's probably the last resort.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: "Putting Your Mortgage in Reverse"
Old 11-14-2006, 10:34 AM   #8
 
Posts: n/a
Re: "Putting Your Mortgage in Reverse"

Quote:
Originally Posted by Sam
It's horribly bad from a financial point of view. I think the people who use this "Reverse Mortgage" do so for emotional reasons.
It's only horribly bad from a financial point of view, if you are planning on Living forever. However, If you 'feel' you might die someday and not want to leave anything to anyone and want to live in your existing house, it is a way to spend more money when you are alive.

got a better way to do this? - I'm listening.
__________________
  Reply With Quote
Re: "Putting Your Mortgage in Reverse"
Old 11-14-2006, 10:40 AM   #9
Thinks s/he gets paid by the post
 
Join Date: Mar 2006
Location: Houston
Posts: 2,155
Re: "Putting Your Mortgage in Reverse"

Quote:
Originally Posted by Cut-Throat
It's only horribly bad from a financial point of view, if you are planning on Living forever. However, If you 'feel' you might die someday and not want to leave anything to anyone and want to live in your existing house, it is a way to spend more money when you are alive.

got a better way to do this? - I'm listening.
Your "want to live in your existing house" requirement precludes other ways.

Edit to add:
Not sure what you mean by "not want to leave anything to anyone" ? With this reverse mortgage you are leaving what's left of your house to the bank. I'd rather leave it to my kids or to charity.
__________________
Sam is offline   Reply With Quote
Re: "Putting Your Mortgage in Reverse"
Old 11-14-2006, 11:05 AM   #10
Thinks s/he gets paid by the post
FIRE'd@51's Avatar
 
Join Date: Aug 2006
Posts: 2,315
Re: "Putting Your Mortgage in Reverse"

Quote:
Originally Posted by Sam
With this reverse mortgage you are leaving what's left of your house to the bank. I'd rather leave it to my kids or to charity.
If there is equity left in the house at the time of your death, it can still go to your heirs. Your estate can sell the house and pay off the loan to the bank.
__________________
I'd rather be governed by the first one hundred names in the telephone book than the Harvard faculty - William F. Buckley
FIRE'd@51 is offline   Reply With Quote
Re: "Putting Your Mortgage in Reverse"
Old 11-14-2006, 11:08 AM   #11
 
Posts: n/a
Re: "Putting Your Mortgage in Reverse"

Quote:
Originally Posted by Sam
Your "want to live in your existing house" requirement precludes other ways.

Edit to add:
Not sure what you mean by "not want to leave anything to anyone" ? With this reverse mortgage you are leaving what's left of your house to the bank. I'd rather leave it to my kids or to charity.
What I mean, is that when my wife and I are dead, we don't care who gets the house.

We're dead and I don't plan on worrying about much when I'm dead!
__________________
  Reply With Quote
Re: "Putting Your Mortgage in Reverse"
Old 11-14-2006, 11:13 AM   #12
Thinks s/he gets paid by the post
 
Join Date: Mar 2006
Location: Houston
Posts: 2,155
Re: "Putting Your Mortgage in Reverse"

Quote:
Originally Posted by Cut-Throat
We're dead and I don't plan on worrying about much when I'm dead!
Don't worry, you won't, even if you want to
__________________
Sam is offline   Reply With Quote
Re: "Putting Your Mortgage in Reverse"
Old 11-14-2006, 04:48 PM   #13
Full time employment: Posting here.
 
Join Date: Oct 2002
Posts: 717
Re: "Putting Your Mortgage in Reverse"

Quote:
Originally Posted by Ron'Da
Some more calculators/information - FYI...

http://www.aarp.org/money/revmort/
This calculator (and/or the results) was even worse than the first. I think they sold me - on giving up on the idea of a reverse mortgage.
__________________
Random Reinforcement is Highly Addictive.
riskadverse is offline   Reply With Quote
Re: "Putting Your Mortgage in Reverse"
Old 11-14-2006, 05:12 PM   #14
 
Posts: n/a
Re: "Putting Your Mortgage in Reverse"

Quote:
Originally Posted by Sam
Don't worry, you won't, even if you want to
So, you do get the idea!
__________________
  Reply With Quote
Yeah..... I meant to do this
Old 12-07-2008, 12:17 PM   #15
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 2,946
Yeah..... I meant to do this

Sorry, folks.....I did a search on reverse mortgages and this is the only thread I found. Nearly all the comments made seem to be relevent two yrs later esp. with regard to clarity and cost of this procedure. The best website I found was AARP.org

Background

My 68 yo brother has lots of rental properties (95% of his assets) and seems to be ready to withdraw from being a landlord, but does not wish to sell until the market rebounds. In the meantime he mentioned getting a reverse mortgage on his residence. I asked "why?", but cant get to the root of the issue (i.e. does he have financial problems). The costs involved are so high that this is a last-resort type strategy IMO. He just says the closing costs are less than a realtor's commission and based on that it's reasonable.

In doing a bit of research, I am forming an opinion that a combination of the highest cash payout and a monthly adjustable interest rate would be the best choice for him.
__________________

__________________
jazz4cash is online now   Reply With Quote
Reply

Tags
mortgage


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Mortgage payments after Early Retirement walkinwood FIRE and Money 19 04-28-2007 07:45 PM
Pay off the Mortgage at Retirement??? bbuzzard FIRE and Money 89 04-16-2007 08:01 AM
Not permitted to deduct mortgage interest from taxes - mortgage v renting? claire FIRE and Money 12 01-06-2007 04:43 PM
Paying off mortgage with an SPIA donheff Life after FIRE 5 12-19-2006 11:56 AM
Advice Needed - Taxable Invest vs Pre-Pay mortgage Trace Young Dreamers 5 09-14-2004 07:16 PM

 

 
All times are GMT -6. The time now is 03:09 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.