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Reverse mortgages
Old 07-23-2005, 07:39 PM   #1
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Reverse mortgages

I have researched this and it seems pretty straightforward and easy,
unless I've been sold a pig in a poke. Anyway, I would like to hear from anyone who has done this. Problems, pitfalls, surprises, etc.
How did it work out? Are you glad you did it? Etc Etc...............

JG
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Re: Reverse mortgages
Old 07-23-2005, 08:56 PM   #2
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Re: Reverse mortgages

Quote:
Originally Posted by MRGALT2U
I have researched this and it seems pretty straightforward and easy,
unless I've been sold a pig in a poke.* Anyway, I would like to hear from anyone who has done this.* Problems, pitfalls, surprises, etc.
How did it work out?* Are you glad you did it? Etc Etc...............

JG
JG: I doubt if you'll find anybody on this board that has used a reverse mortgate. I haven't reasearched it much, but I did get a call from a solicitor a while back. If I remember right, both parties on the title have to be at least 65.

I can only say from the information I got from him on the phone, it seemed like a last resort type of situation. Also, the percentage they would lend was only about 15% of what my property was worth. There also appeared to be a lot of incidental costs to put in motion.

For our case, the way to go would be to downsize. (If the situation forced it).

Might be interesting though, if you'd post the information you've researched.

Jarhead
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Re: Reverse mortgages
Old 07-23-2005, 09:14 PM   #3
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Re: Reverse mortgages

How about a cash-out refi if it came to that. You would get all of the cash out of your equity and just start another mortgage payment schedule. Even a home equity line of credit is something that I would consider (to take out smaller amounts and pay back).
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Re: Reverse mortgages
Old 07-24-2005, 12:24 AM   #4
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Re: Reverse mortgages

Quote:
Originally Posted by MRGALT2U
I have researched this and it seems pretty straightforward and easy,
unless I've been sold a pig in a poke.* Anyway, I would like to hear from anyone who has done this.* Problems, pitfalls, surprises, etc.
How did it work out?* Are you glad you did it? Etc Etc............... JG
Here's two links:
The last time we had this conversation.
Another article I found on Investopedia.
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Re: Reverse mortgages
Old 07-24-2005, 04:49 AM   #5
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Re: Reverse mortgages

Quote:
Originally Posted by Nords
Okay, thanks, but what I am really looking for is folks on this forum who have
actually done it. Anyone?

JG
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Re: Reverse mortgages
Old 07-24-2005, 04:56 AM   #6
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Re: Reverse mortgages

Quote:
Originally Posted by maddythebeagle
How about a cash-out refi if it came to that. You would get all of the cash out of your equity and just start another mortgage payment schedule. Even a home equity line of credit is something that I would consider (to take out smaller amounts and pay back).
Well, it would be simpler (and cheaper), but you have to pay the money back before you move, sell or die. I want to get the money and live in the house
with no dent in cash flow.

JG
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Re: Reverse mortgages
Old 07-24-2005, 05:24 AM   #7
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Re: Reverse mortgages

Quote:
Originally Posted by ex-Jarhead
JG:* I doubt if you'll find anybody on this board that has used a reverse mortgate.* I haven't reasearched it much, but I did get a call from a solicitor a while back.* If I remember right, both parties on the title have to be at least 65.

I can only say from the information I got from him on the phone, it seemed like a last resort type of situation.* *Also, the percentage they would lend was only about 15% of what my property was worth.* There also appeared to be a lot of incidental costs to put in motion.

For our case, the way to go would be to downsize.* (If the situation forced it).

Might be interesting though, if you'd post the information you've researched.

Jarhead
Okay, the minimum age is actually 62. I have only talked extensively to one lender. They seem to be specializing in these and will loan 50%
of appraised value. You can take the money in a whole bunch of different ways.
Costs seem a bit high but not prohibitive. In our case, the appraisal, plus 2%
fee to the bank, plus 2% fee to ?, and in our case we would need flood insurance also.
We can downsize some more, but moving is a hassle and we have reasons now to stay here. The reverse mortgage seems pretty painless.
I don't see it as a "last resort", but won't be doing it unless I really need
the cash. Don't know yet, just getting educated.

JG
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Re: Reverse mortgages
Old 07-24-2005, 10:37 AM   #8
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Re: Reverse mortgages

Quote:
Originally Posted by MRGALT2U
Okay, the minimum age is actually 62.* I have only talked extensively to one lender.* They seem to be specializing in these and will loan 50%
of appraised value.* You can take the money in a whole bunch of different ways.
Costs seem a bit high but not prohibitive.* In our case, the appraisal, plus 2%
fee to the bank, plus 2% fee to ?, and in our case we would need flood insurance also.
We can downsize some more, but moving is a hassle and we have reasons now to stay here.* The reverse mortgage seems pretty painless.
I don't see it as a "last resort", but won't be doing it unless I really need
the cash.* Don't know yet, just getting educated.

JG
JG: As Nords mentioned, apparantly this has been kicked around a bit. I passed on last discussion, after checking a calculator, and finding out they would only lend about 15% of the appraisal of property.

However, after plugging in a number of different zip codes, and assuming your property is about
$100,000, the 50% figure for FHA/Hud is right in the ball park.

The percentage available for loan versus the appraisal of property, decreases a hell of a lot as you go up the scale.

In your case, and in my opinion, if you were planning on staying in home, and not concerned with leaving property to heirs, being able to get 50% (Tax free) would be hard to turn down.

Jarhead
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Re: Reverse mortgages
Old 07-24-2005, 11:14 AM   #9
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Re: Reverse mortgages

Quote:
Originally Posted by ex-Jarhead

In your case, and in my opinion, if you were planning on staying in home, and not concerned with leaving property to heirs, being able to get 50% (Tax free) would be hard to turn down.

Jarhead
Looks that way to me. I have spoken to the lender several times and
am very comfortable with them. I won't be 62 for about a year but am
beginning to factor this in as a real possibility.

JG
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Re: Reverse mortgages
Old 07-24-2005, 12:33 PM   #10
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Re: Reverse mortgages

Can one not include this in FIRECALC either as a "sell your home" for lump sum reverse morgages or as an additinal "annuity" for some sort of life withdrawal payout scheme. For many people the equity in the home could be a very large fraction of the resources available at advanced ages and should be allowed for if one is trying to estimate statistics for retirement failure.

Often the recommended approach regarding pensions, SS, annuities, homes, etc. seems to be to subtract these from the investment problem then do the investment problem as if in isolation. It looks like FIRECALC is set up ok to allocate for all resources though
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