Are reverse mortgages a good idea, or a ripoff?
I keep seeing ads for reverse mortgages for senior citizens - do you know anyone who's ever done that? Was it a good idea in the long run?
Marcy......Here's my best attempt at replying....Just as with any type of mortgage, loan or legal banking transaction, there are "several types."
You need to know that "reverse mortgage" can be so varied and complex that financial experts strongly advise attending an intensive class or reverse mortgage seminar before even contemplating applying.
I have looked into this in depth. What I can say after my education is that a reverse mortgage is in NO WAY as simple, cut & dry 1-2-3 as the TV commercials make them seem. Not by a long shot. What these commercials do is merely come close to summing up the possible bottom line.There's a LOT in the process to get there.
I can also tell you that it is vital to check out numerous lending institutions that offer reverse mortgages. Again, every lender has their policies and procedures.
Bottom line? Is it a good idea? It can be and it's worth investigating thoroughly. It can also be disastrous. Caveat emptor! I hesitate to use the term "rip off." Instead I would ask, "Just how much does ANYTHING run by the government ever result in positive benefit to the American public?? That's a good question to search the answer to.
I came to the decision I'd say, "Yeah, thanks, but no thanks."
I agree with Paula and adding that....yes there are different loan parameters to Reverse Mortgages as with other loan products. The main focus for lenders is yes, the lenders want to acquire the home to make a profit of higher sales price when sold. They also more than likely will put these loans into a mortgage pool and sale to an investor (someone on wall street or elsewhere) who will pay them a premium price during the LOL. They also can sell the servicing of the loan; a lot of lender do NOT service the loan. As you know there are more ways than one to make money on one single mortgage loan than the interest payments that are made. They would not be focusing on these loans so much if there were not a profit to make.
No, the loan will not take care of all monies such as the taxes and insurance on the dwelling. The owner still needs to make the hazard insurance and taxes payment. There have been elderly people who did not know they still needed to pay the taxes/insurance on the home, and became delinquent. Being well informed if key!!!
A lady in one of my Facebook groups told that she came very close to losing her house over a reversed mortgage. She said the agreement was misleading.
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