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Reverse Mortage Purchase
Old 03-14-2009, 11:01 PM   #1
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Join Date: May 2005
Posts: 287
Reverse Mortage Purchase

I'm not recommending this but since the law has changed you should know about it. In fact, this is a sales pitch, not mine, but something I read. Having said that it might work for some people.

"Suppose you were interested in moving out of your larger, more expensive home that you could sell for $400,000 and interested in a 55 and over community that had a condo available overlooking the 5th hole that sold for $150,000. You have the money to pay for the home outright and would only have condo fees and taxes to pay for the rest of your days there. But what if you could do this and increase your retirement cash flow? Now you can; you have the ability to put down a percentage of the homeís purchase price, say half, or in this case $75,000 and finance the other half with a reverse mortgage which means you will not have to make payments on this financed portion. Why would you do that? If you paid for it outright, youíve reduced your available cash and its earning capabilities to $250,000 from the $400,000 you had after the sale of your other home.

In our example, by putting down only $75,000, you now have $325,000 in available cash from your original $400,000 AND you will not have a monthly mortgage payment, so you will still pay just your condo fees and taxes on the property for as long as you live there. Youíve just increased your retirement income or cash flow by 30%. Judging by most folks that live in 55 and over communities or that have moved to smaller, more easily maintained homes, they donít intend to move again and this is the home where they will be until their last days, so remaining equity isnít necessarily the most important thing to them.

What is your take away from this post? This is BRAND NEW, YOU DIDNíT HAVE THIS CAPABILITY YESTERDAY, and you can take advantage of it January 1st if you are planning on buying a home and/or downsizing if you are 62 or over and you can increase your retirement cash flow by 30% in some cases using this new home purchasing program. The older the client, the smaller percentage they have to put down and the larger increase in retirement cash flow they will realize and thatís a good thing to have in these times."

posted by boont

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Old 03-15-2009, 03:07 AM   #2
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Join Date: Jul 2005
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i think the fees of 25-30,000 bucks on a reverse mortgage may negate any good you could do with the money usually.... otherwise theres nothing special about reverse mortgages, they are simply balloon payments due when you die or sell the home... you pay for insurance to cover any shortfalls........

it just seems like a a very expensive mortgage in the long run even though it will give you cash flow .........

hmmmm if you work out the fees and actual interest it may be a deal most people here would loan you the money for under those terms
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