options for family members after parents death. Does the son or daughter have to the amount the house is worth or the amount and all the interest and fees. If the house is worh valued at 80,000. what does the family pay???
ave pasho
of NY
@
Jul 26, 2009 22:29:08 PM
We have done it
We did the Reverse Mortgage to stay in our home and give us time to sell it with out having a FIRE SALE..Our home was worth about 525000 at the peak of the market.. It just got appraised for 345000. We paid 11750.00 up front in closing. Is it expensive? Yes!, however, compared to my home losing nearly 200k in Value and 40 percent in my 401k I really don't thing twice about the 11k!!. The peace of mind is well worth the thought that I can stay here until the house sells, and I can make up the closing costs on the sell of the home...
Dan
of NV
@
Jul 04, 2009 11:00:05 AM
Perverse mortgages for the senile citizens
Because of their scrupulous practices of the last 5 years, Mortgage Brokers are looking for business. Seniors beware, they are preying on u!
The loans called reverse mortgages seem too good to be true. Do the math urself on AARP and u will learn that u only qualify for 1/3 of the value of ur house, even if the mortgage broker told u 1/2 of an overblown quick estimate.
U need counseling. So u pay the fee up front over the phone (from $75 to $125). While ur thinking ur going to go to a class with other seniors with whom u can exchange notes, a man comes on and speed reads a number of pros and cons u read already online and that is it.
A week later the appraiser arrives. Remember he depends entirely on the mortgage broker to make a living. Within 20 min he appraises ur home for far less than the broker estimated and recommends a new a/c, a new roof and new doors and windows and paint in and out. He demands his fee up front. If u pay him ur duped coz his fee is payable at the closing. If u don't follow that (or have an attorney follow that) u'll pay twice. So u pay him up front thinking that the loan will arrive next. Wrong.
Next inspectors arrive and give a quote for the roof, the a/c, the painting and repairs. The sum of these quotes cover most of ur anticipated loan. Desperate, u sign the repair contracts, hoping the closing will be soon.
The closing comes and woopdeedoo the broker shows u a clear report on all the repairs. Ur stunned coz no repairs were ever done. The broker deducts the sum of repairs and gives u the rest of the loan. Not enough to pay the real estate taxes for the next 5 years.
The broker lies about the inspection fees being payable up front. They are not. All fees are payable at the closing. The broker lies that if u do the repairs urself and do the painting urself, the contractor can give u a clear report for free. Sure. Who would make a free inspection and give a free clear report and make no money on the job?
I tell u, Reverse Mortgages are a perverse scam. It puts the mortgage broker in a position of power. Like never before, he brokers that power over appraiser and contractors alike to fleece the senile citizens, and the government guarantees it.
KingBee
of FL
@
Jun 28, 2009 12:24:19 PM
We found out in the last 2-3 years
that loose home equity loans were not really such a good idea for many folks. I think the same caveat should be applied to HECM loans. If you don't HAVE to do this to survive, don't do it.
As for the the #8 point, where some families have informal reverse mortgage loans with younger relatives helping elders stay in a house until repayment to heirs by sale of the house at someone's death, I say "great" (as long as it's not overdone). YOU DO HAVE TO ALL LOVE AND TRUST EACH OTHER AND DO RIGHT to make this work, of course, but you are not giving a slice of family money to corporations for all kinds of fees--and that's always the goal to try for.
Muser
of NM
@
Jun 17, 2009 12:57:37 PM
Is A Reverse Mortgage Right for You? (June 17, 2009)
Dear Mr. Moeller,
I was enjoying your article until I read your example of closing costs and you included the servicing set-aside. This is a common misperception and overstatement of the actual costs to close an FHA insured reverse mortgage.
A servicing set-aside is no more than a reduction of the amount that can be borrowed today in order to provide a cushion for the expected servicing fee to accrue over time (based on the borrower's life expectancy). The FHA's calculation of proceeds is generally based on the idea that interest, mortgage insurance and the servicing fee will accrue over time, and in all cases, the loan amount is reduced to a number below the value of the home in order to create the cushion for these items to accrue. However, because the servicing fee can be varied by the loan officer using the calculator, the servicing set-aside is broken out as a separate item that is used to determine the level of benefit. The actual cost of the servicing fee is the monthly flat dollar amount (usually $25 - $35), and the borrower only pays this for the number of months the loan is use.
Also, aside from the origination fee and up front mortgage insurance, closing costs may run closer to $3,000, rather than $5,600 (but this will depend on location). So all in all, on avergage the cost of doing the loan in your example would be closer to $17,000. Still not cheap (which is why it is imperative for seniors to choose an excellent lender and counselor), but far less expensive than you've represented.
ave pasho of NY @ Jul 26, 2009 22:29:08 PM
Dan of NV @ Jul 04, 2009 11:00:05 AM
KingBee of FL @ Jun 28, 2009 12:24:19 PM
Muser of NM @ Jun 17, 2009 12:57:37 PM
Mark Burton of MD @ Jun 17, 2009 11:53:10 AM
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