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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76079  
Subject: Re: Reverse Mortgage .. Date: 5/3/2011 7:40 PM
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thanks....


i must be missing something because i don't see the down-side...
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The fees for reverse mortgages are based on the value of the home, not the value of the mortgage. So if your home is $3X and they are loaning you $2X, the points you will pay will be 1.5 times the points you would pay for a 'forward' (normal) mortgage.


but they're loaning me 3X ,so they must think the house is worth 4X?

points are added to the mortgage?
and then how ever many years of interest on the points?



In addition to interest charges each month, your account will be charged a servicing fee - probably around $20 - $30 each month. That will be added to the principal balance, along with the interest, so your principal balance that the interest is based on will increase every month.


but who pays those fees? me or my heirs?

if the latter and i don't care whether they get the house clear and free (they will be getting the cash), it could work



If you have to leave your home for 6 months or more (go into nursing home, assisted living, etc.) you must either sell your home or pay the loan off, or the bank can foreclose.


ack. that would be a serious risk/concern


For those retirees who have most of their net worth tied up in their home, and don't want to move, it can be a way to access the equity without having to commit to payments on a HELOC or regular mortgage, but it's at a cost.


a lot of my net is in the house (and don't expect to move), but don't really need it (near as i can tell), but it sounded too close to free-to-me money..



... hmmm... if i'm reading this right, if interest just accrues, in 14 yrs, house would have to more than double in value for heirs to 'break even'
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