Reverse Mortgage is either the greatest thing since sliced bread or the most deceitful way lenders could have figured out on how to fleece the elderly.
Since you need to be 62 or older it is for senior citizens.
Senior citizens that have MONEY,or at least HOME EQUITY MONEY.
The Reverse Mortgage allows the dormant asset money that is in a home
to turn into CASH.Cash that does not have to be paid back, ever, by the borrower as long as the home remains their primary residence.Yes you get a percentage of the money that you have built up in your homes value and THE HOUSE PAYS IT BACK,not the borrower.
MONEY FROM HEAVEN? Or should I say from the future taxpayers?
How could getting free money(not exactly but does not have to be paid back by the borrower or their heirs) be so bad?
The answer lies in what the senior citizen DOES with this cash.
Not in getting it,but rather what is done with the money!
If the borrower lives for about 12 years or longer more will be owed than the asset value of the home,that is of no concern for the borrower because the house pays back the loan albeit the FHA,HUD will have to put in taxpayers dollars to make the full payment.
Here is the rub."What the senior does with the money makes this loan either
a wonderful dream or a disaster."
Since time and compounded interest will ALWAYS overcome the asset value
for the sake of understanding the RM we will say that home is lost to the lenders in order to make the loan paid-in -full.
At that time we can declare if it was the greatest thing since sliced bread or if it was a disaster.
If the money were used to pay off debt,you screwed yourself over twice
because you gave a lender(s) the money now, but you will by way of your home STILL BE PAYING INTEREST ON THE FULL AMOUNT,until you die or leave the home.
That to me is TWICE.Payment to one lender today by the senior and then by the house with compounded interest.
IF you USE THE MONEY WISELY you get to double or triple it and never have to pay it back.Get a Return On Investment from their money.
I am a real estate broker and you need to get legal counsel any time you deal with asset management but here are two cases I had the pleasure of working with.
Case 1.
D.M. (82) could not sell her home in Orlando for $360,000 the best offer was @
$230,000.She said NO WAY.Rented it @$1500/month.
BOUGHT a home in Palm Beach County( now her primary residence ) using a RM.Home value $300,000.
She put a total cash of $78,848 into the home SHE HAS NO MORTGAGE PAYMENT FOR AS LONG AS SHE LIVES THERE.Has a $1500 additional income from her rented Orlando home which she lets everyone know that it is for sale for $360,000
when it reaches that value.
Case 2.
Husband (73) Wife (68) own there home valued at $430,000.
Took out a RM for a check for $280,000.Now we all know that they "sold" their home to the lenders for $280,000 because the note was fixed @5.5% which become a balance of more than a HALF MILLION owed in less than 15 years.
BUT,What did they do with the $280,000?
They turned it into a PAID IN FULL SECOND TO DIE LIFE INSURANCE POLICY
FOR $1,069,143.00------A TAX FREE ESTATE for their daughter.
ONE MILLION SIXTY NINE THOUSAND ONE HUNDRED FORTY THREE DOLLARS
(Cost was $250,000,so they had $30,000 to do a little cruising)
Yes,a $430,000 home they get to live in with no mortgage payment for the rest of their life,paying maintenence and taxes then surrendering it for $1,069,143.00.
THANK YOU,FHA,HUD
A Reverse Mortgage is as GOOD or as BAD as -HOW YOU USE THE MONEY.
Please time and space limits,details and a million different applications.Hey,my opinion and who am I?This law is continually changing,I guess they know that they do not have it right yet,so CHECK IT OUT,while it is still around.
Basilovecchio
Broker owner,Best Solutions Fl Real Estate email : bestsolutionsfl at aol dot com
email me for free informatiom: bestsolutionsfl at aol dot com
