Reverse Mortgages

[Chief Tutor]

What are the benefits of a reverse mortgage versus a home equity loan. I don't really understand the difference or benefits.

[OregonLO]

I took a class on 1031 exchanges and they briefly covered this section and I think the idea of the reverse mortgage (if I remember correctly) is just that...Every month you get a check versus the home equity line that you have to draw on and make payments on every month. You have to be 62 or older to take part in this.


after some further research you can get the money in installments like a mortgage just to you instead, a lump some, or the most used approach which would be as a line of credit.

[Business_with_Greg]

You stop making payments on your mortgage and you annuitize your equity. You have choices on what amount you get and for how long.

[Lockett The Lender]

Reverse mortgages are great if you are advanced in years and need to capitalize on the equity in your home and receive cash on a monthly basis. Personally I prefer cash outs, but I guess reverse mortgages are less of a hassle and guarantees a check every month until the equity is gone.

[IntlMtg]

You have to be REALLY carful with these!!!

I would agree in most circumstances a cashout refinance is the better option.

I had one client come to me who already had a reverse mortgage & who I guess lived longer than he planned and the equity had grown much faster than he thought...

long story short the reverse mortgage lender had stuck him with a ridiculous pre payment penalty which on top of the HUGE pre pay penalty required a penalty of half of whatever the current equity in the home was! - this resulted in him paying well over $500,000.00 in penalties to get out of the loan!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!

[Lockett The Lender]

You have to be REALLY carful with these!!!

I would agree in most circumstances a cashout refinance is the better option.

I had one client come to me who already had a reverse mortgage & who I guess lived longer than he planned and the equity had grown much faster than he thought...

long story short the reverse mortgage lender had stuck him with a ridiculous pre payment penalty which on top of the HUGE pre pay penalty required a penalty of half of whatever the current equity in the home was! - this resulted in him paying well over $500,000.00 in penalties to get out of the loan!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!

Its also going to depend what state you are in, some states protect borrowers more than others.

[OregonLO]

You have to be REALLY carful with these!!!

I would agree in most circumstances a cashout refinance is the better option.

I had one client come to me who already had a reverse mortgage & who I guess lived longer than he planned and the equity had grown much faster than he thought...

long story short the reverse mortgage lender had stuck him with a ridiculous pre payment penalty which on top of the HUGE pre pay penalty required a penalty of half of whatever the current equity in the home was! - this resulted in him paying well over $500,000.00 in penalties to get out of the loan!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!


Ouch, that just doesn't seem right. I had a client approach me about a reverse mortgage. We decided to go with a cash out refinance on his home and just pull some of the equity out rather than doing the reverse mortgage.

[Lockett The Lender]

Ouch, that just doesn't seem right. I had a client approach me about a reverse mortgage. We decided to go with a cash out refinance on his home and just pull some of the equity out rather than doing the reverse mortgage.

Reverse mortgages have their advantages but not very many. A cashout refi is much safer and allows the client to manage their own resources. Personally I would never do a reverse mortgage for myself, I prefer all cash up front. A reverse mortgage is kind of like an allowance with your own equity.

[ROBINSON]

Reverse mortgages have their advantages but not very many. A cashout refi is much safer and allows the client to manage their own resources. Personally I would never do a reverse mortgage for myself, I prefer all cash up front. A reverse mortgage is kind of like an allowance with your own equity.
Thanks there for the information on reverse mortgage.So from the above and

in your it is considered that reverse mortgage has its demerits.So I even wish

to prefer cash in return.

Regards,
Robinson

[Cool_Cave]

A reverse mortgage allows home owners to receive a loan against their home -- either in the form of a lump sum, regular monthly checks or a line of credit -- that's repaid with interest when the borrower sells the house, permanently moves.Reverse mortgages tend to be variable-rate loans with heavy front-end expenses to ensure that the deal is worthwhile to the lender if the borrower exits early. The loan will be bigger for more expensive homes and older borrowers. But the amount you get may also be capped depending on your home state and the type of loan you receive.

[JoeT]

keep in mind the closing costs on a reverse mortgage are very high.

[rsd317]

Being a reverse mortgage specialist, I am taken aback by the many misconceptions loan officers have regarding reverse mortgages.

I come from a financial planning background that is not based on products rather startegies that favor the consumer and not the financial institutions. Having this background has given me the understanding of how real wealth is accumulated and how a reverse mortgage is an integral part of good practical planning.

Why would you ever want equity tied up in your home? If you are a mortgage planner you understand exactly what I am talking about. Would it not be better to have the equity unlocked and working for you and not subject to the real estate market fluctuation?

This is an annuity/mutuaql fund. If one your clients had $400k in a mutual fund and ws living on a fixed income, dont you think they would tap into it to mkaing living a little bit easier?

People are in their 70's still making a mortgage payment?

Costs are costs-nothing is free and they are comparable to a refi.
Equity does get chewed up, but if you help your clients plan right they will understand what happens to the equity and not make frivolous purchases.

This is TAX FREE MONEY, no income or credit qualifications.

What is so bad?

And for for higer home values, the numbers are huge. I had a woman today that is interested in pulling ou $2 mil dollars out of her $4mil coop. She can live a little and still replenish her childrens/charities inheritance with other financial products. Whats so bad about that?

[uthai]

Hai Guys !

I hope I can give useful information about reverse mortgage that you need.

What is a Reverse Mortgage?

A reverse mortgage is a loan that allows the homeowner to convert some of the equity in their home into cash or monthly income, while retaining home ownership.

Reverse mortgages work much like traditional mortgages, only in reverse. Rather than making a payment to the lender each month, the lender pays the borrower.

[gunther.arneson]

What happens when the payee (collecting the monthly reverse mortgage payment) passes and there is still substantial equity left in the property? Will there have to be other measures taken by the benefactors to ensure 'smooth sailing'?

[Estreetloans]

RSD317 - You mention that there are no credit restrictions. If this is true then seniors in need of utilizing their equity have no other choice than a reverse mortgage correct? A cashout refi would require monthly payments and good credit. If a senior has no income, only social security benefits, a cashout refi is not even an option right? Just curious. Thanks