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Shermann

(8,720 posts)

28. If you run the numbers they aren't as predatory as they might seem (assuming the bank is reputable)

Fri Oct 4, 2024, 02:32 PM

Oct 4

The bank is loaning you money and the interest will accrue, and they might not get anything back for 30+ years. They cap the loan amount such that they are unlikely to lose money. That means you will only be able to access a percentage of the equity in the house, maybe 20%. After such a long period of time, all that accrued interest means the bank might get the rest. They are taking a risk here and banks get paid to take risks. But you get to stay in the home as a significant fringe benefit and never have to make loan payments.

If you want to access closer to 100% of the equity you have to liquidate the house and rent. But there are costs associated with that as well.

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BlueinUtah

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I'm considering a reverse mortgage on my house. Anybody here have one, or know something about them? [View all] CTyankee Oct 4 OP

DON'T deRien Oct 4 #1

The bank owns the home afterward. Doesn't it? LuvLoogie Oct 4 #2

We are in our 80s and hubby is handicapped. No, we don't have accommodations for renting a room. CTyankee Oct 4 #4

Be careful. They can turn out to be expensive. Here's some info from the FTC: Ocelot II Oct 4 #3

Folksy Tom zselleck is punchable XanaDUer2 Oct 4 #5

Yes, he is. My tax guy is not; he's solid and can give me good advice. I don't think we are his first clients who have CTyankee Oct 4 #6

Better to claudette Oct 4 #7

Don't do it. Our neighbor did and regretted it later. OLDMDDEM Oct 4 #8

why did they regret it? CTyankee Oct 4 #9

The money he borrowed accumulated interest to the point where there was no equity in the house. He died and left OLDMDDEM Oct 4 #10

We don't have kids from this marriage. Neither his nor my kids would even want it and would consider it to be a pain in CTyankee Oct 4 #12

I understand your points. There are up front fees also. My neighbor's fees were about 15% of the borrowed amount. OLDMDDEM Oct 4 #13

That seems like a lot. I don't know CT's tax in my case. Again, a question for my accountant who is very familiar with CTyankee Oct 4 #14

I agree. Talk with your professional about it. Good luck. OLDMDDEM Oct 4 #15

I am a CPA and do not recommend reverse mortgages. Big Blue Marble Oct 4 #18

Doesn't sound so bad. louis-t Oct 4 #30

Beware: President Reagan was behind it! Omnipresent Oct 4 #11

Yes, reverse mortgages are part of the array of strategies by the wealthy Big Blue Marble Oct 4 #19

Trickle Up. (n/t) Iggo Oct 7 #42

I looked into one a few years back and found the terms just horrible. gristy Oct 4 #16

My 1st choice would be, if you have the funds, pay off the mortgage. Fla Dem Oct 4 #17

The key thiing here is that we get to stay in our house. The escrow amount just went up A LOT. CTyankee Oct 4 #20

Escrow should be for taxes and insurance PennRalphie Oct 4 #21

I am going to the bank that holds our mortgage to discuss this with them. They might have an idea for us. CTyankee Oct 4 #22

Good luck! PennRalphie Oct 4 #27

If you've owned your house for 25 years, it must be worth a whole lot more than you paid for it! Vinca Oct 4 #23

We did consider it but we love our home and want to stay in it for as long as we can. CTyankee Oct 4 #25

mom has one Kali999 Oct 4 #24

I have not done it, but I am extremely suspicious. Do your research. Depending on your state, you may be.. surfered Oct 4 #26

If you run the numbers they aren't as predatory as they might seem (assuming the bank is reputable) Shermann Oct 4 #28

Reverse mortgages are not terrible if you can get over some psychological hurdles MaryMagdaline Oct 4 #29

Not sure why I would even care about dying broke. CTyankee Oct 6 #36

Your kids do not inherit your debt Lulu KC Oct 6 #37

I don't know if they have changed since I did mortgages but I did not recommend them to any clients. Bev54 Oct 4 #31

It depends on your own situation. BlueinUtah Oct 5 #32

Thank you! CTyankee Oct 5 #33

Happy to help BlueinUtah Oct 5 #34

I haven't had my call with my tax preparer yet (it's tomorrow) so I'll have good info from him. CTyankee Oct 5 #35

Have you looked into refinancing? Lulu KC Oct 6 #38

Thanks. I"ll review the possibilities with them, I am sure. CTyankee Oct 6 #39

Sometimes Lulu KC Oct 6 #40

Don't feel guilty BlueinUtah Oct 7 #41