By Admin on Sep 3, 2010 in Financial Services
My in-laws are elderly (in their mid and late 80s) and own their home outright. The in home care expenses for my father in law are mounting and reverse mortgaging their home seems to be the answer. Does anyone have any suggestions about who to go with for the lowest rates or what any down sides to this type of financial product are? Thank you all.
This product has become ever more popular with the aging society. Because of this these loans are changing almost daily. The downside to this type of loan is your house is appreciating after you lock in the payment rate. So in essense you have two things working against you the bank interest on the money they are giving you and the appreciation of the market. Also be wary of the fee’s and transferability. If your in-laws were to die, in some cases the bank can make a lump payment to the beneficiary and take the house. In other cases you can pay them back at the sale of the house and take the difference. They are somewhat complicated circumstances and you need to look over all the contract details so you have all the right information.
Ryan M | Sep 3, 2010 | Reply
I would consult with your parents financial planner, I guess
they put a lien against the house for whatever was reversed
(which means I would keep records exactly of what was received) and deduct it from the Estate upon your parents
death. Which means they get paid before anyone in
their Will.
Ask M | Sep 3, 2010 | Reply
I dont know anything about this but i just wanted to say that it is too bad they have no other options. Our elderly should not have to worry about mounting expenses to receive care. Im sorry that they and all the family has to go through this.
sandra e | Sep 3, 2010 | Reply
Do they have any other options? I would shop around if this is what is decided and ask lots of questions. Don’t sign anything unless you understand it completely.
Sahara | Sep 3, 2010 | Reply
A reverse mortgage essentially eats away at the owner’s equity (in this case, you’re inlaws). The money they’re getting from the bank is buying them out of their home. The reverse mortgage will diminish any estate they may have wanted to leave for their children. On the other hand, it spares their children of having to come up with expenses while the parents are still living.
mita17_m | Sep 3, 2010 | Reply
Bad side: You loose your equity in the house. I would try a credit union or a large financial services company like AIG. You can also check with HUD for advice, if your parents qualify.
orrFius | Sep 3, 2010 | Reply
Liligirl, most of the advice here is good, except for one correction on Ryan’s. There is no program that allows the lender to take the house. The loan is a simple lien on the home, nothing more. If a default occurs (only failure to keep up insurance & taxes or disrepair result in default) it is treated like any other loan, that is foreclosure & sale.
See the HUD and or AARP website for detailed info including pros/cons. http://www.aarp.org/money/revmort/
Best of luck and let me know if I can be of any further help. My email is in my profile.
Hobbes | Sep 3, 2010 | Reply
If you are looking for a reverse mortgage to receive some much needed cash, you may want to look into a reverse mortgage wholesale loan. This is the perfect way for you to get a reverse mortgage<!–without all the added fees that lenders are adding on these days. Keep reading to discover exactly what this type of loan is and what it can do for you.A reverse mortgage wholesale loan is not available directly to you.
http://mortgages-finance.awardspace.com/
This type of mortgage loan is sold to a lender at a discounted rate and the lender will add points to the rate and pass the savings on to you.There are three main–>agencies that sell reverse mortgage wholesale lender accounts. These agencies are the Federal Housing Authority, the Fannie Mae foundation and the Financial Freedom Cash Account.
Thomas | Sep 3, 2010 | Reply