Reverse Mortgage Problems
I need to have repairs to my house, which I intend to stay here. But I can’t afford the expense at this time.
Answer by juniperolocke1
The urge to devote a lot more cash than you should!
Reverse Mortgage Problems
3 Responses to Reverse Mortgage Problems
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Although the urge to get that steady monthly income may be strong, the drawback is that you lose the ability to take out equity when you need it and you have nothing to pass on to your heirs, if that is a concern. If you don’t need the monthly income, a better route is to take a home equity loan or line of credit to get the cash for the one time repairs.
You must be 62 years old. This will cost you about $ 4000 in closing cost and the mortgage company will send an appraiser. When he sees the repairs needing done, they will lower the value of the home. Also, the loan company will now have a lien on your house which can be paid off by your offsprings. Good news is that you dont need to repay the loan which will be offset until you are gone (Sorry). Reverse Mortgage is a good deal but I would try to find some cheap labor on some Mexicans who need money to do the work. You probably can pay 50-75% less than a contractor.
This is an excerpt from Smart Money.
“The problem with reverse mortgages? First, they don’t come cheap. There are origination fees of up to $ 6,000 on a Fannie Mae loan, for example, and closing costs as high as $ 12,000 on a $ 150,000 loan. Also, your folks will face a lengthy application process that includes, among other things, mandatory counseling. Diana E. Watkins, a professor in Santa Clarita, Calif., had to wade through streams of paperwork to help her mother,
Esther Ormston Sell, pull $ 135,000 from her home last year. Then, on the day of the signing, they couldn’t close because Sell had no picture ID (she had never worked or driven a car). “The banker told me that this is one of the biggest problems with women of my mother’s generation,” says Watkins, whose mom’s attorney had to vouch for her identity.
You’ll also have to use good judgment when considering a reverse mortgage. Given the costs of the loan, it is not a prudent way to cover short-term cash-flow needs. And sometimes it simply makes more sense to sell the house. For example, if your parent is diagnosed with a terminal illness and has only a couple of years to live, selling the house would provide more cash than a reverse mortgage, says Tom Scabareti, vice president at Financial Freedom. ”
This one is another informative one: http://itsjustmoney.blogs.com/its_just_money/2006/08/reverse_mortgag.html