Reverse Mortgages

Grammie asked:


I heard, yesterday, that many people have lost their houses by getting a reverse mortgage.

I am not planning on getting one myself, but why would they lose their house before they die?
How does a reverse mortgage work. I thot I knew.
I thot there were no payments to be made
It was not an article. It was on the news yesterday.

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6 Responses to “Reverse Mortgages?”

1. bob W Says:
   March 14th, 2010 at 10:42 am

   Create a video blog…instantly.

   a reverse mortgage is just a equity loan either in a lump sum or monthly payments. They can foreclose on it like any other type of loan and there are fees and points up to 10% of the amount borrowed upfront along with an adjustable interest rate.

   if you have to go to a nursing home the bank will call the debt due. If you let the home fall into disrepair they can call it due. If the property taxes or insurance become one day late they can foreclose.

   many dangers and scams out there

2. Landlord Says:
   March 14th, 2010 at 11:00 am

   Reverse Mortgages

   If you own your home 100% then you will not loose it via a reverse mortgage. The bank pays you until they have paid for the house. At that point they stop paying and wait for you to pass to claim their property.

   Some people may be doing this while still owing a mortgage. If they default on the mortgage they owe then their homes can be foreclosed.

3. v b Says:
   March 17th, 2010 at 12:43 pm

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   I haven’t seen such articles and I don’t think you have either..

   Reverse mortgages are set up as non-recourse loans. Eg, the lender and FHA absorbs any loss at the time of sale. Therefore the borrower cannot lose their home just by doing a reverse mortgage.

   The borrower’s heirs may have assumed they’d get the house when mom/dad died, but that was only if the estate could pay back the loan (and if it could, they wouldn’t have gotten the reverse mortgage in the first place).

   I could see someone getting the reverse mortgage and being unable to pay all of their bills and still losing their home for other reasons such as property taxes. (If the property taxes and insurance aren’t paid, the reverse mortgage can become due.)

   And alas, there is always the possibility of fraud.

4. Jennifer H Says:
   March 17th, 2010 at 11:21 pm

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   to make it simple, when someone who has nothing and about less than 10 years to live, they do a reverse mortgage. They give up the house to the bank and the bank gives them a VERY small monthly payment for it.

   Instead of the homeowner that ownes the house giving money to the bank, The bank owes the house and gives money to the prior owner.

5. mcmufin Says:
   March 19th, 2010 at 3:19 pm

   Reverse Mortgages

   The idea behind reverse mortgages is that they are supposed to be issued to people who will pass away prior to the expiration of the reverse mortage’s term. People lose their homes when they are healthy enough to live past teh reverse mortgage’s term.

   A typical reverse mortgage will have a 30 year term. (You take out the mortgage, and for thirty years you receive payments. from the mortgage company.) In the unlikely event you live for the full 30 years of the reverse mortgage, the mortgage company will have completely paid for the property. The homeowner then has two options. First, the owner can repay the amounts owed on the reverse mortage. Second, the owner can turn the property over to the lender.

   It is rare, but it happens.

6. poppy1 Says:
   March 21st, 2010 at 9:58 pm

   Create a video blog

   Hi Grammie,
   Good Question Dear Friend.. I would like to know my self..
   Your Friend,
   poppy1