What if there is more than 1 "son or daughter/" And, what EQUITY are they taking? The owner makes no payments. That "equity" gets paid to the folks in monthly installments or they can take a lump sum. Interest and equity accrue until the old folks die or move out. This heirs get what's left after those accrued payments are paid off.
I do not understand anyone who would not want their parents to have the best life possible.
Thanks for bringing the thread back on track. The thread crappers had taken over!
I think the Green Hornet was the last on point, sensible poster prior to you, Mike.
I was trained in RM by my current employer but chose to not do them (I would have had to do them and them alone). The training was quite valuable in helping me know when to refer someone to a RM specialist.
Those of you without a clue (most on this thread, I'd say), go to AARP site. They have quite a bit of useful info. There is also a reverse mortgage association that offers valuable information.
By far, in most areas of the USA, the HUD insured "Home Equity Reverse Mortgage" is the predominant product. This field is regulated big time. Sure there are crooks in the business, but there are many more dedicated loan originators that will bust them in a heartbeat. Where I work, the RM LO's are well screened & I don't know one of them that will cut corners and do the wrong thing when no one is looking but them. I am sure there are some, but not among the 4 I know.
Marketing RM takes extreme patience. Mandatory HUD approved counseling. There probably is a bit more urging to appraise at x value, mostly because the LO is rooting for the situation of the people they are helping.
The note signed is a non-recourse note. The perfect person for a RM is someone that is likely to stay their home so long that they are upside down.
Think of someone that is 72, no job, owes 125K on a 200K home, on SS & part time at Wal-mart as a greeter. Still can't service the mortgage, pay the taxes and eat. Something has to give, but his credit is shot, and the debt ratios are over normal lending parameters. The person is in OK health & will probably live to over 80, probably 85+. Pretty hopeless.
FHA HECM: 500 credit score, no problem, 70% debt to income ratio, no problem. The guy doesn't have to go live in government housing or downsize into a shoe or card board box. He gets a RM which, in his case will pay off the 125K mortgage balance and leave him with no house payment for the rest of his life, as long as he stays there with no gaps more than a year.
Do you think a younger relative might move in and look after him/her? Perhaps a live in that does simple housekeeping and 2 meals a day for rent?
The guy/gal probably bought 10+ years in his/her home with peace of mind. Relatives will have peace of mind as well except for the greedy inheritance types. FM, let them suffer
If the person owned the home free and clear, they would receive their choice of $770/Mo for as long as they lived there, or a line of credit for $125,000 that grows at the note rate plus 1/2%. Yup. Lock in appreciation even in a declining market.
Guess what? If the owner stays healthy & in the home, the long term appreciation rate is closer to 7% since the note is variable rate and short term rates are temporarily low. That 125,000 will double in 10 years. No declining market here. The estate can draw out the LOC if the owner dies suddenly. Non recourse note. The LOC is owned by the homeowner.
Combinations of LOC, monthly payments and lump sum cash can be the proceeds of a RM. There are winning combinations for the over 62 crowd. Please get educated on this matter before you post wild things on a forum that real people in need of a solution might accidentally read. Such unlearned comments recklessly ****** into the wind can cause unnecessary damage.
Thank you.
