Speakeasy forum: Are services for seniors really beneficial as seen on TV

Be wary when anyone tells you they are looking out for your best interests. When someone extends to you their right hand to shake, their left hand might be giving you a shakedown. Learn a little bit of Latin. Start with "caveat emptor". That's what I think.

in fact, almost no facts I'm sure of.

Something to be very cautious about, but in some cases it might work out well.

I don't know what the details are, the first question is what happens if the person actually did outlive the revese mortgage.

When property was thought to be continually going up, reverse mortgage could work for the bank and the selling owner. The bank generally made money because the owner/seller died before the reverse mortgage actually paid the value of the house.

I'm sure my ignorance of the details has led me into some fault.

I have been surprise to see the commercials during the housing downturn. But in hindsight, it seems that the commercials have resume, or increased at least, since the housing market seem to bottom out about a year ago.

Mortgage your house for $50,000. They calculate the interest in a way most beneficial to them which compounds monthly until you die or they own the house. How long would it take until they ask you to move out. And what about your kids? Don't you have any family feeling? I refer them to my ex-wife. If that doesn't provide enough evidence to cause them to avoid the reverse mortgage, they should be assessed by psychiatric services.

Rob

That's about what you can take out on a reverse mortgage. It's similar to a regular mortgage except "reversed" or backwards. In a regular mortgage you take out a loan for about 80-95% of it's value (rest is by down payment required usually) and then spend 20-40 years paying it off.

For example on a regular mortgage you take for $200,000 to be amoritized over 30 years at 6%, your payments would be$1,199.10 per month. Now if you multiply those monthly payments by the months, you end up with a total cost of $431,676 or paying more than twice the amount. Actually you'd pay 215% of what the house was originally worth.

Let's reverse it and that same house you don't get the best reverse mortgage, but do get $100,000 lump sum from it at age 65 at the same interest rate. If you lived to be 80, then over that 15 years the cost to pay off the mortgage would be almost $152,000. If you have heirs, and the house is worth more than the amount owed, they can sell the house for a greater amount and pay off the debt on the reverse mortgage and the difference is theirs. So, if the house was worth exactly the same $200,000 those 15 years later they'd still have $48,000 minus expenses, probably clearing at least $40,000 from it.

If however there was a housing crash like recently experienced and the value of the home dropped to about $160,000 then any who could have inherited are under no obligation, walk away and let the bank take the house. Either way, their last parent got to enjoy the fruit of their labor up till the end, because they not only got half of what the house was worth, but also gained for every month they lived in a rent free home. If the rental rates would have been $1000 per month on the home, and they lived another 15 years or 180 months in the home, you can add $180,000 to the reverse mortgage amount of $100,000 and the value to them was $280,000 for that time.

and whether or not it was a good move isn't known until it's time to cash in your chips. As for inheritance, I'd not want a parent to worry about what they were leaving. Unless it was such as a business I was due to take over, I'd want to use inherited money in such a way as would be approved by the one(s) leaving it. If I didn't earn it, it's not mine.

You can them in lump sum, you can take monthly payments. My choice would be lump sum deposited in an interest bearing certificate that paid at least quarterly and figure an amortized schedule of reduction involving both interest and principle across the next 20 years since few live past 85.

Spousal rights would depend on several factors. Is it the same spouse as when the reverse mortgage was done, or was there no spouse at that time? If so, then the spouse probably could be foreclosed against and the house would probably only be in the name of the original recipient of the reverse mortgage.

Usually and probably required under HUD reverse mortgages, and certainly if both spouses were listed as property owner, the spouse would be figured into the reverse mortgage before it was issued and have same rights under it for each one.

I suspect stories of "spouses" being kicked out of a home with a reverse mortgage on it involves property owners who were single when they first received such mortgage and then married.

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmhome

The govt insured HECM reverse mortgage.

Some information

Before applying for a HECM, you must meet with a counselor from an
independent government-approved housing counseling agency. Some lenders
offering proprietary reverse mortgages also require counseling. The
counselor is required to explain the loan's costs and financial
implications, and possible alternatives to a HECM, like government and
nonprofit programs or a single-purpose or proprietary reverse mortgage.
The counselor also should be able to help you compare the costs of
different types of reverse mortgages and tell you how different payment
options, fees, and other costs affect the total cost of the loan over
time. You can visit HUD for a list of counselors or
call the agency at 1-800-569-4287. Most counseling agencies charge
around $125 for their services. The fee can be paid from the loan
proceeds, but you cannot be turned away if you can't afford the fee.

Reverse mortgage loan advances are not taxable, and generally don't
affect your Social Security or Medicare benefits. You retain the title
to your home, and you don't have to make monthly repayments. The loan
must be repaid when the last surviving borrower dies, sells the home, or
no longer lives in the home as a principal residence.
In the HECM program, a borrower can live in a nursing home or other
medical facility for up to 12 consecutive months before the loan must be
repaid.