Reverse mortgage?

[jnyork]

We are in our 70's and own our home outright, as well as everything else we have.

Got our house insurance bill today, over a thousand bucks for a year, taxes are another 1500, that is 3/4 of a month of our income. Hurts. We are on the edge of having to sell our home.

Thinking about a reverse mortgage to take care of chit like this, don't need a great deal but would sure take the edge off. a

I have read a lot of negative about these things and very little positive, I see all the expensive advertising on TV and wonder if it's such a good deal why do they have to do so much advertising?

If you have had personal experience with a reverse mortgage, would like to hear from you. Thanks.

[KiwiKev]

You have to be careful about this sort of thing. Some people have been scammed. This is how they do it.
SCAM A:
1. The company gains a paper claim to your house in order to pay you a monthly sum of money.
2. The company then sells the mortgage they have taken out to another company and that company goes bankrupt. The first company then claims the asset to cover the debt the second company defaulted on. YOU receive a letter notifying you to vacate your own house.

SCAM B:

Company A promises you a set amount per month. You sign over your Deed to them. They take the Deed to a Bank and take out a loan based on the Deed and an inflated valuation. Lets say the value of your house is $300,000. They have a Deed worth this. They get a valuation of $450,000 and get a 80% loan worth $360,000 they pay you two monthly payments of $2000. They then default on the loan to the bank and the bank forecloses on your house (which you no longer own - you signed the Deed over) This scam was very common in the UK were a lot of retired people were defrauded out of their houses through reverse mortgages. It was all legal because of the way the companies set up their financial affairs. NO-ONE could prove that the companies had intended to fail.

When a landlord asks you to move as tenant they have to give you reasonable notice. When a Bank tells you to move as a tenant of a landlord who has defaulted on the loan you usually have to move out immediately:

Talk to your bank. Can you re-mortgage the property? If you remortgaged at 80% of the property, assume $350,000 value you will receive $280,000 cash and retain an equity of $70,000 . Now you will have to service that loan at $1750 per month over 25 years. This equates to $525,000. However one might expect the house to increase in value over the next 25 years and this might offset the loan. Some banks have schemes where they do not ask to pay back a set amount but have a claim on the asset and will write into the contract an additional claim on your equity. For example 50% claim on a increase in the equity in the property. Lets say after 10 years you want to sell the house. The new valuation is $600,000. You have to pay the bank the $280,0000 and the increase in equity which will be $600,000 - $280,000 -$70,000 x .5 = $125,000

After you have talked to your bank talk to your lawyer. Never, never consider a reverse mortgage scheme from any company other than a main street bank. See scam 2!

Think about the original problem you are trying to solve.

Land tax? We call this rates. Here we have discounts for retired folk.
House insurance. Paying too much? Shop around.

Suggestion 1: Reduce your insurance and house tax bills by downsizing or moving.
Suggestion 2. Reduce your assets.

Redo your sums. For most folk you will have the normal monthly expenses to cover, I should imagine that insurance and land tax would be smaller than food, fuel, electricity, water, phone..........

I am not a financial adviser so always talk to your bank and lawyer for professional advise.

[David]

We are in our 70's and own our home outright, as well as everything else we have.

Got our house insurance bill today, over a thousand bucks for a year, taxes are another 1500, that is 3/4 of a month of our income. Hurts. We are on the edge of having to sell our home.

Thinking about a reverse mortgage to take care of chit like this, don't need a great deal but would sure take the edge off. a

I have read a lot of negative about these things and very little positive, I see all the expensive advertising on TV and wonder if it's such a good deal why do they have to do so much advertising?

If you have had personal experience with a reverse mortgage, would like to hear from you. Thanks.

Hud.gov - they will have a list of "regulated" ones and follow the REAL rules.

Last I knew it was around 10G to do them which means the earlier the better and cap was like 180K on ANY house even if it's worth millions, again I haven't looked at this in many years when helping a friend.

I have to add another 0 on that my real-estate taxes are almost 15K a year now, I want to get out of this h.. hole state but I'm still "discussing" that with the wife to move away from the kids.

Also for home insurance do you know your agent well, ask him what the over is. I know state farm will pay 20% more then what your insured for so reduce the value by 20% is a ZERO loss. Then you may take into consideration what can and cannot burn up, even if your house goes up in a complete blaze, you don't need to pour new concrete. Even if you decide not to rebuild and run with the money, they aren't going to pay for that anyhow so your not getting it.

[Pete44ru]

.

If $2500 ( 1 year taxes/insurance) = 75% of 1 month's income = $744 (+/-); ergo 1 month's income = $3244 (=/-), which figures to equal 1 year's income = $38,928 (=/-).

$38,928 (+/-) less $2500 annual taxes/insurance = $36,428 (+/-) available funds for other expenses

My wife & I are also retired & in our 70's, and are at a similar income level - so the 1st thing we did was to revise our lifestyle, as we found that we could no longer afford to live like we did before retirement, when we had plenty of disposable income.

We reduced reduced our entertainment, travel & other expenses - "making do" with what we now have.

We have reduced our homeowner's & vehicle insurance to the bare bones minimum - like an insured amount just above the minimum that must be insured before the insurance company will pay for a loss.

We asked (you won't know unless you ask) & sometimes garnered additional available home & motor vehicle insurance policy discounts - like senior citizen discounts, low yearly mileage, multiple vehicle & multiple policy discounts.

Additionally, we applied to our local taxing municipality for their senior & veteran's discounts (if any).

The reduction of our expenses takes a lot more time/effort than before we moved to a fixed income @ retirement - but has been worth the effort of exploring every avenue that opens up for us.

Through talking with other, experienced retiree's (@ a local senior center), we have taken advantage of some state, federal, and private senior programs - like getting our home fully insulated for the bubble under a federal energy-saving program, which in turn drastically reduced our energy (heating, cooking & cooling) expenses ($$$ saved on electric bills), and also discovered/applied/received local heating assistance ($$$) for seniors (income qualification).


I hope we've provided you some economizing avenues that you haven't explored yet - Best Wishes !


.

[Blaine]

You might check with the authority that collects property taxes....In my county, seniors can apply for a reduction.

It's not everybody's cup of tea but I bought, and rapidly paid off an older doublewide in a senior park about fifteen years ago. It's only valued at 8K for tax purposes so my property taxes are only about two hundred a year. I have a lot rental payment of 450 a month, and utilities. Pretty cheap. I sleep as warm, dry, and comfortable as the guys down the street in their 500,000 Taj Mahal. It's also quiet..all these old fanny burbs go to bed real early, and don't like kids anymore than I do.

[David]

I'm only 50 so not me but they have that discount here for seniors the crazy part is you have to reapply EVERY year like maybe you got younger? Point is like anything good they make it painful to do. Also has to be done by a certain date so they hope you also forget and missues it.

[Sixgun]

I just retired from a peon factory worker job. I don't owe anybody a dime. Income is close to what I made (which is a hair above poverty) and there's one thing for sure.......


After working close to 50 years and paying my taxes and performing my responsibilities as a citizen, it will be a cold day in hell before anyone boots me out of my home. There are a sizable amount of human parasites in this nation who don't gave a rats azz about taking the sweat of other responsible people's hard work.


Stay in your house, pay what you can and if the tax mongers come knocking, let em know who's house it is.----6

[cas]

I'm struck by the $1500 taxes. I know people paying close to that every month. (for 3-4 bedroom houses on a 1/4 acre) This state sucks.

[stretch]

I got a homeowners insurance bill a few years back for over $1K myself.
'Bout needed to buy a new roof, 'cuz I nearly went through it!

I immediately began shopping around. I now pay just under $400
per year for BETTER coverage. And I heat with wood. Yes, the
insurance company knows, AND I sent pictures of the wood stove
installation to 'em. Linda Gray of Downeast Insurance down in
Richmond, Maine really helped me out. Talk to a coupla independent
agents and try and go with smaller insurance companies - the ones
that don't spend your premiums on TV ads.

THAT got me shopping around for car insurance. I saved 50%+
there. Car, truck, and 5 motorbikes for about $1K annually. And yes,
that's for full coverage, including collision. (Okay, the car and truck
are 2004 vehicles, but still....) Dairyland is absolutely first-rate for
motorcycle coverage. (Yes, they're based in Wisconsin! )

My property tax bill is also about $1500 per year.

Cutting cable TV saved me $70 per month between the TV charges,
equipment rental, taxes, and surcharges. Netflix is something like $8.

Right now, I'm getting a good view of my retirement in 10-12 years.
Everything's cut to the bone, and this is giving me a very good view
of my basic, no-frills expenses.

It ain't easy for many retirees to maintain things at a satisfactory level
on their fixed incomes. I feel your pain!

-Stretch

[wecsoger]

Consumer advocate Clark Howard has several postings on reverse mortgages

http://www.clark.com/reverse-mortgages- ... ors-stay-t

http://www.clark.com/is-a-reverse-mortg ... al-for-you

http://www.clark.com/is-a-reverse-mortg ... al-for-you

http://www.clark.com/reverse-mortgages- ... eal-for-se

Short version for those who don't want to follow the links: there is a lot of bad and very little good out there.

[Tycer]

It ain't easy for many retirees to maintain things at a satisfactory level
on their fixed incomes. I feel your pain!

-Stretch

Here's why:
http://www.chapwoodindex.com

[Sixgun]

Well, I knew it would come to this but let me explain something to all of you HONEST PATRIOTIC HARD WORKING AMERICANS out there......who fear repercussions from the banking industry.

This country and the banking institution is as crooked as a Hillary Klinton.

I have a SIL and BIL who took out a $300,000 home equity loan on a $400,000 house at 62 years of age. The house was free and clear of all debt before the loan. They made 3 years of payments, all the time having a blast....going on cruises, playing in Vegas, buying new vehicles, "helping" out their two low life thing 35 year old parasitic kids. ---------then they stopped making payments..........not only did they stop making payments, they stopped paying real estate taxes......two years go by....nothing.......all kinds of threats....court appearances......whatever.

After 5 years or so, they owed $100,000 more than the original loan (now..$400K)

In the meantime they let their house run down.....heater blows out....roof is all nasty....these pigs even let their inground pool turn green with sludge.

Bank people, along with township officials come out and declare the place ok....but in baaaaad shape

BIL bites the dust at 70

SIL .....at the time...... 70 years old........claims the banking industry is using undue pressure on "old people".

Judge agrees

Get big rain storm...floods basement.....insurance company comes in and repairs the entire interior of house.

Not a payment of any kind ...including real estate taxes....has been paid since 2009. Debt is now closing in on $500,000.

SIL still living in house...no threats. She's laughing.