Reverse mortgage?

[Nasdaqsam]

Originally Posted by Mr_D

Son has BK's and his house may be up for foreclosure again soon. Bailed him out once already this year. Last time though.

Ya that's a deal breaker for him.

[RRR]

Originally Posted by Chinewalker

About 50 years ago I worked for a guy that ran a small business. About 80 people in total.

He told each and every one of his employees to run their loans, mortgages, insurance and investment transactions by the companies' lawyer.

For free. On the companies retainer.

Years later I followed his lead. Even though the largest number of people I ever employed was 26, judging by the feedback, I think I saved my then employees aaand myself a lot...

Money and hearth ache...

WOW! What a way to give something back to your employees with small cost to you.

[MSHappyCampers]

Originally Posted by Chinewalker

About 50 years ago I worked for a guy that ran a small business. About 80 people in total.

He told each and every one of his employees to run their loans, mortgages, insurance and investment transactions by the companies' lawyer.

For free. On the companies retainer.

Years later I followed his lead. Even though the largest number of people I ever employed was 26, judging by the feedback, I think I saved my then employees aaand myself a lot...

Money and hearth ache...

Thanks for "paying it forward"

[iRent2u]

Originally Posted by sam-3

Dave Ramsey is a financial expert. He say no five thousand times over to a reverse morgage.

I agree with Dave. This would be my LAST option.

[Sweetbriar]

Originally Posted by Mr_D

I can easily live and pay the monthly bills on my monthly income without taking money out of my annuity or IRA. Just would like to reduce the house payment. Just thought a RM would be an easy, quicker method.
Maybe I'll just put the house up for sale for $100,000 less than it's value since all the flooring needs replacing and the kitchen and bathrooms need refurbished. That would net enough to pay everything off and save me about $3,000 a month.
My son would like to move to this area, but his paymant history is less than stellar!

Our goal is to hit retirement, 2026, without a mortgage or any revolving debt and we're well on the way to the goal. Will probably still have the vehicle loans but nothing else. If I was already retired and looking for a way to reduce my monthly outlays AND the home was a bit more than what I need selling and downsizing would be pretty high on the list. The $100K reduction might not be the best way to go. Talk to a realtor and get a sense of your local market. When dealing with real estate just keep in mind EVERYTHING is negotiable.

Here's an idea regarding downsizing, keeping a homestead while living with a coach that can support full timing. Work it right to keep the tax bases low but still have a place to fall back on as needed.

[MisterT]

Originally Posted by Superslif

My parents have done a boat load of the Variable Annuity's that I feel they have been taken advantage of not knowing all the details. Seems like there would be one "small" detail not mentioned, and it would change the whole complexity and purpose of that investment vehicle. I don't know why at their age they get into such complex investments.

I'm glad you explained it as well as you did.

yes, the variable annuity MIGHT get it's name due to it's 'variable' benefits to the owner!

Now, in fairness, in long-term 'up' markets, no one is going to complain, commissions and fees, or not... they just see the value versus last year....
BUT, in substantial 'down' markets, and when the customer is contemplating retirement, or within a short time frame, folks can get very upset about not only the 'decline' in the account, but the 'additional' fees that suddenly are part of the negative equation, that serve only to exacerbate the situation.
Granted, the broker doesn't like the 'down' market, either, as much of their commissions and fees are latched to their customer's account values, but a customer who 'invests' in variable annuities, without being aware of the upfront fees, ongoing fees, and early withdrawal 'privileges', are asking for future heartache... unless they retire right at the exact right moment during a very long-term 'up' market, then no one really cares. Up markets make everything seem great, and cover up a lot of 'hidden' things. Ask Mr Madoff.

While a broker makes a commission on FIXED annuities, there are no ongoing fees, and the commissions are not 'assessed' against the annuity value. If you decide to ask for early withdrawals during the first several years, the company will 'draw back' much or all of the nice interest they have paid. Most CDs also have a similar penalty, though it's typically the last quarter of interest, or it could be more, depending on the length of the guarantee.

Everything has some risk, some more/some less, and interest rates tend to follow.

For example, I can put my money in a savings account and withdraw it anytime, with no penalty - I'll make .35% per year, nice.
Or, I can put it into a fixed annuity, with a 3 year guaranteed interest of 2%, and never less than 1 1/2% afterwards, but could loose some of that interest if I withdraw too early.
Or, I could put it into a 5 year CD at 1 1/2%, with a little loss of interest if I break the contract early.
Other than that, they are all somewhat similar - no market investments, only interest.

[weredoingit]

Here's an idea regarding downsizing, keeping a homestead while living with a coach that can support full timing. Work it right to keep the tax bases low but still have a place to fall back on as needed.
Attached Files
File Type: pdf Binder1.pdf (473.1 KB, 3 views)
__________________
2006 Hurricane 31D built on a 2006 Ford F53

What a great idea, thanks for sharing. As far as a reverse mortgage I guess it would be good for some people, but the idea kind of makes me feel like I would be handing over the one thing that makes my wife and I feel secure. I know you an live there until we die, and have extra $$. We have over $300,000 in equity, we're in our mid fifties and do to medical reasons I have not worked since 2015 but I'm still employed with the same employer since 1987. I'm thinking of retiring this July?? So the bottom line is our household income has been less the half of what we were bringing in 2015, So I think we are a perfect example of why someone might want (or NEED) a reverse mortgage, We've had to take extra $$ out of retirement accounts in order to survive. But I can't pull that plug. I feel like if we did then we would be locked into staying here forever, and that's not something we are willing to do at this point. However I have told my wife that if I fell over dead tomorrow, then she should look into a reverse mortgage. Until then we're going to wait and get through these medical issues and then look at our options. Hopefully we will be able to keep the house and go full time until we're to old, and then we have a house to come home to.
Once when we were talking about a reverse mortgage my wife said "What would we leave the kids" Keep in mind the kids are in their 30's and are doing well, my response was "we raised them, gave them everything they needed to start their own lives, now it's are turn. I'm not going to live out my "Golden years worried about what's going to the kids when we die". If their is something left that's great, but it's our turn to live for us.

[georgelesley]

Originally Posted by weredoingit

Here's an idea regarding downsizing, keeping a homestead while living with a coach that can support full timing. Work it right to keep the tax bases low but still have a place to fall back on as needed.
Attached Files
File Type: pdf Binder1.pdf (473.1 KB, 3 views)
__________________
2006 Hurricane 31D built on a 2006 Ford F53

What a great idea, thanks for sharing. As far as a reverse mortgage I guess it would be good for some people, but the idea kind of makes me feel like I would be handing over the one thing that makes my wife and I feel secure. I know you an live there until we die, and have extra $$. We have over $300,000 in equity, we're in our mid fifties and do to medical reasons I have not worked since 2015 but I'm still employed with the same employer since 1987. I'm thinking of retiring this July?? So the bottom line is our household income has been less the half of what we were bringing in 2015, So I think we are a perfect example of why someone might want (or NEED) a reverse mortgage, We've had to take extra $$ out of retirement accounts in order to survive. But I can't pull that plug. I feel like if we did then we would be locked into staying here forever, and that's not something we are willing to do at this point. However I have told my wife that if I fell over dead tomorrow, then she should look into a reverse mortgage. Until then we're going to wait and get through these medical issues and then look at our options. Hopefully we will be able to keep the house and go full time until we're to old, and then we have a house to come home to.
Once when we were talking about a reverse mortgage my wife said "What would we leave the kids" Keep in mind the kids are in their 30's and are doing well, my response was "we raised them, gave them everything they needed to start their own lives, now it's are turn. I'm not going to live out my "Golden years worried about what's going to the kids when we die". If their is something left that's great, but it's our turn to live for us.

I used to do RM’s for a major bank. My first question was always “do you need the $$ to pay the bills”. If yes, then a rm might be for you. If you have enough income, probably not. Second question was “is estate preservation important”. If yes rm is likely not for you. Third question was “do you plan to stay in this home for the rest of your days or do you plan to move in a few years”. If planning to move in the near future, a rm is not for you. If leaving the max to someone is important, a rm is not for you. If the wolf is at the door and money is in short supply, it may be a good idea.

All that being said, my typical client was a widow that had not done the finances before the hubby died, had little knowledge of such, took out a home equity line to make ends meet and then got into trouble. We paid off many, many home equity lines.

My first recommendation as to how to take the distribution was to do a line of credit if possible. That way the impact on the estate would be reduced greatly. Usually though in about 75% of cases, the all cash option was used because the wolf was at the door.

In our case if I pass first (likely) DW should be ok as house and all else is paid off and she will have a decent secure retirement check. She will also get a good size life insurance. Our only son is doing very well Himself and has told us to do whatever we want to. DW knows that if for some reason she needs extra $$ a rm with a line of credit would be the final option.

[Radacravitz]

Originally Posted by georgelesley

I used to do RM’s for a major bank.

First question was always “do you need the $$ to pay the bills”. If yes, then a rm might be for you. If you have enough income, probably not.

Second question was “is estate preservation important”. If yes rm is likely not for you.

Third question was “do you plan to stay in this home for the rest of your days or do you plan to move in a few years”. If planning to move in the near future, a rm is not for you. If leaving the max to someone is important, a rm is not for you. If the wolf is at the door and money is in short supply, it may be a good idea.

All that being said, my typical client was a widow that had not done the finances before the hubby died, had little knowledge of such, took out a home equity line to make ends meet and then got into trouble. We paid off many, many home equity lines.

My first recommendation as to how to take the distribution was to do a line of credit if possible. That way the impact on the estate would be reduced greatly. Usually though in about 75% of cases, the all cash option was used because the wolf was at the door.

best online feedback i've read on the subject, i hope you don't mind my lite edits.

my wife and i have lived in silicon valley since the 80's, have beaucoup equity and until the last year or two, felt we would remain in our home through life end so considered a RE for mad money to play with. but things are changing fast in the valley so we're outta here in a year(ish) and i'm glad we didn't tap the equity as we'd discussed.

thx again for the clarifying post, much appreciated.

[Mr_D]

Good info coming in along with ideas.
I don't need to leave an estate, just enough for a cremation and urn. DW died about 18 months ago.
Can pay all my bills without taking money out of my annuity.
Stick house needs major repairs/upgrades such as new flooring throughout, bathroom and kitchen remodels. House was a Parade of Homes show house in 1986 and still has the original carpet, which is showing some wear after two kids and numerous pets.
I'm 71 and want to travel some before I have really major health problems and have to put roots down.
Maybe I'll call "We buy ugly houses"!

[wa8yxm]

I have watched the ads where they say "The best part is you still own your home" Well you still pay the taxes. but the BANK owns it. that is clear.

And if they lie in the ad.. Well.. Sours the deal for me.

[MisterT]

no, just like your or my mortgage, they own INTEREST in your property, but YOU are the property owner, therefore you still pay taxes, insurance, maintenance, etc. All the same rules for mortgages apply to reverse mortgages or 'regular' mortgages, the only difference is that you get either a lump sum, or a monthly income, and don't 'have' to make monthly payments back to the mortgage company... they get their return when the house is sold, whether by the owner, while living, or by the company after death. And, they don't get to 'keep' everything that the home sells for, if more than is due them.

[georgelesley]

Originally Posted by MisterT

no, just like your or my mortgage, they own INTEREST in your property, but YOU are the property owner, therefore you still pay taxes, insurance, maintenance, etc. All the same rules for mortgages apply to reverse mortgages or 'regular' mortgages, the only difference is that you get either a lump sum, or a monthly income, and don't 'have' to make monthly payments back to the mortgage company... they get their return when the house is sold, whether by the owner, while living, or by the company after death. And, they don't get to 'keep' everything that the home sells for, if more than is due them.

Absolutely correct. Just like a regular mtg or home equity line, if you fail to make payments, pay your taxes, maintain the property or keep it insured you will lose your house. You still own it in that you can sell it if you choose. The estate in the case of a rm has the option to pay the rm off and do whatever they wish with the property if it has appreciated substantially.

If the rm loan balance is more than the house is worth FHA insurance will make up the difference at no cost to the estate. That is one reason closing costs on a rm are higher than on a regular mtg as the premium for the FHA ins is collected up front.

As I said previously a rm is not for everybody, but for some it is the only way to stay in the home. If you don’t need it don’t do it. An example of a rm I did in 1998 for a widow. When I arrived at her home she was living on about $400 a month. When I left she had an additional $400 a month guaranteed for life. For her, it was the right choice. I set her up with the monthly payment option to protect her from temptation to give a lump sum away to others I saw hanging around.

[MisterT]

I think your last paragraph spells it out very well, a perfect example of someone with equity, sometimes a LOT, in their home and yet are feeling like they have a hard time making ends meet.

A monthly payment 'annuity' is just like social security, something you'll have coming in each month and you can set your budget for it. A lump sum might not be the best for most.

Tom S does a good job in making folks feel 'comfortable' with the idea, as I guess he gives off a good and trusting 'vibe'... and done very well, I think.

I think that the 'naming' of this type of mortgage is part of the misconception and maybe mistrust of the finance vehicle itself. Mortgage is not necessarily a great 'term' on it's own, and you go and add a 'reverse' to it!
Maybe an idea would be to call it an Equity Income Mortgage, seems to make more sense in what it is, and does, and doesn't confuse it with 'buying a home', but more of 'making use of what's mine'. Not to be confused with HELOC Home Equity Loan or Line of Credit, though.