Reverse Mortgages Explained
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- Опубликовано: 28 мар 2021
- Reverse Mortgages Explained - Have you ever had Reverse Mortgages Explained? What are reverse mortgages? How does a reverse mortgage work? You and your family will benefit from knowing the pros and cons of a reverse mortgage. Understanding how a reverse mortgage works can be part of your Retirement Planning. Most have a goal of retiring comfortably and if you secure your retirement this video is a must watch.
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• Reverse Mortgages Expl...
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Thanks For Watching! We would like to know if you have any other Reverse Mortgage questions.
Ok what if your home is not paid off, can you still get a reverse mortgage? Could you please direct me to details on that?
Thanks
@@stangtrax you would need to speak to a reverse mortgage consultant
I know a reverse mortgage is based on a lot of factors including age and life expectancy. Does the reverse mortgage expire in the event I live another 5-10 years and all the equity is depleted?
I have never seen anything as complicated as it regards home insurance claims holding a reverse mortgage. Since July 2023 I have tried desperately to help my Aunts get the INS money for repairs after a neighbor's tree destroyed it during a storm. First, the insurance company drug their feet paying the claim then it was required that the checks be sent to Hud for endorsement. Now hud is keeping the the INS money until repairs are made. Two elderly women and a not-so-smart niece (me) are fighting a losing battle. Now it's December 2023 and they're still living in a hazardous situation. Please reconsider attaining a Reverse Mortgage there are so many unknown pitfalls that at the surface can't be seen until a disaster occurs. Good Luck
Sounds like basic finance to me. You have an asset, we have a way to take it.
Thank you for sharing your knowledge
Great information. Thanks
The subject of reverse mortgages always seems to get a "knee jerk" bad idea reaction from a lot of people. I don't need one myself but for some people I could see where it might not be such a terrible idea. Don't take the money all at once (that's how you got into financial trouble in the first place, spending too much) & realize that you will not be leaving your house as someone's inheritance.
Works for some people.
That last part isn’t often true. In most cases when the home owner passes away there is equity on the home after the mortgage is paid off. That is because the entire value of the home is not available to take out in a mortgage and it typically grows in value after the mortgage is taken out.
I wish you had talked about buying a new home scenario! We sold or last house and have been traveling. We are now looking at buying our last house. We have no kids, so no heirs, cash to put down, two SS incomes, disability income, IRAs but don’t want a payment because homes and interest rates are so high.
I agree this is a very hot topic! We’ve been thinking about the numbers this year
Thank you for this informative training.
Thanks for this vid. Your first example is exactly where I am. I'm still a little freaked out about the fees/expenses of securing and maintaining this RM. But, feeling more and more comfortable with the idea. Is it necessary to deal with a local lender? Or . . can someone in another state help me with one of these?
This sounds so beneficial.. And is it the same in Australia?
There are persons posting videos on Reverse Loans mortgages. They make it seem like your gonna be in a debt hole. There's nothing wrong with getting a reverse loan. As long as you pay your taxes and home insurance and maintenance. You can move out and sell your house as long as you pay back what you owe and the rest of money is yours.
Very informative subject.
Glad you think so!
Now do reverse mortgage foreclosure rates explained.
Great video, very informative. My question is regarding the accrued interest portion.In your example of a $500k house all paid for with a $275 reverse mortgage and a $500/month annuity type payment, does the interest accrue on the whole $275k eventhough I am not using it or does it accrue on the monthly payments I am receiving every month? thanks
What happens when the Aires decide not to sell the initial home used for reverse mortgage?
How does the agent helping you select a loan company?
How much more is the interest rate for a reverse mortgage as opposed to a regular mortgage? As of this writing (May 2024) the lowest rate I see is just south of 9%.APR.
Does a reverse mortgage have to be acquired in the state you live. Or can I set one up with anyone in any state?
No links for your guest in the show notes..
Maybe you could have the topic on the masses of senior citizens who have no retirement saving and can't sell their home and move into a 55+ community. Because of health reasons their homes are now up for foreclosure and they have a reverse mortgages.
They can still sell.
There is no reason in this RE market that a senior can't sell their home.
So you have to keep paying if your under ?
Big question how the front costs are handled and do they deduct from line of credit or get pushed to end.
pushed to the end.
Just like a forward mortgage, all costs are included as a calculation of the “over all” fees and charges that have to be paid. Ex - if the reverse mortgage costs are $10,000, and the senior is approved for a $100,000 line of credit on a home that was “free and clear” the $10,000. Fees is their “initial starting balance”.
The remaining $90.000. Will be in the established line of credit and will increase over time . Once used, any amount of the line of credit that is used, will then be added to the “existing current balance side”, ie, the initial $10,000 (plus interest) of the original balance.
I'm 52,but my husband is 81...he owns the home...if he passes away how long does it last?
These guys remind me of morticians.
Yes, sort of. It reminds me of why I didn’t major in finance.
What about if there still a balance on the home (not paid off)? When the borrowers pass away and the heirs want to keep the property, what would be owed to keep the property? Paying the house off at the current market value of the home at the time of the borrowers death? Or pay off the balance and the equity line of credit the company gave the borrowers?
What circumstances is a reverse mortgage not a good option?
The heirs still can inherit the home they would just be responsible for any debt. If they sold the home they will get the remaining equity.
@@SecureYourRetirement What are specific components that would be considered the debt?
the balance left of your mortgage balance. with the reverse mortgage as make withdrawals they become debt against the asset.
Question
I own a mobile home free and clear current value $72,500. But lot rent has sky rocketed to $600 a month so I want sell it and buy a single family home . With prices high on homes I need $125,000 to buy. Offered a reverse mortgage for the $125,000 if I sell mobile put $65,000 down on new home. I'm 62 and just receive $861. A month in disability. Would a reverse mortgage be a good thing for me at my age and current financial income limited? Thanks for help.
Terri if you plan on living in your next home long term than it would be an excellent option for you.
If I took out a purpose reverse mortgage and I come into a windfall of money can I just pay the reverse mortgage off with no problems or is there a limit to the time to pay in full and also are the interest rate locked in from the time I purchase the purpose reverse mortgage or do the interest fluctuate along with the market.
Yes!
Yes there's a limited time and penalty for paying the purpose reverse mortgage off and if I live beyond the time allowed for the reverse mortgage what happens also if my house value is 250 and I only take 60 out can I go back later and take more
@@ro8156 no penalty
@@ro8156 in regards to you living beyond the supposed "reverse mortgage" time, the lender CANNOT require repayment of the loan until you either move from the home or pass away. Even if your loan amount goes above the worth of the home, as long as you pay the taxes and insurance, you can continue to live there,
My question is let's say I won a lottery ,can I pay my loan without selling my home.?
Yes
What if a senior --age 75-- owns a mortgage-free custom home worth $2.5 [ or more] . Can this senior borrow only $400k? I assume yes. And let's say the senior dies in 6 years- the heirs inherit the home but must repay the reverse mortgage-right? And the interest has added up and so now heirs own what? $500k?
One thing for sure that I see is: Interest exists it is not gone, except it is not required to pay monthly either the loan or interest. But as a traditional mortgage you lock in to an interest percentage which accrues as time passes and it is awaiting you sometime down the line. Yes you can stay in your home or condo but the interest isn't gone anywhere until you pay off the loan whether you sell the home or pay the loan. It is just that it relaxes you from paying monthly obligations each month. So a reverse mortgage isn't interest free. Right?
no it’s not interest free
Regardless of the nature of the mortgage, reverse or traditional, a bank makes interest on the money they lend ! With a traditional mortgage, it is built-in to the mortgage with each payment, over the 15 or 30 year. With the reverse mortgage, the interest is also added to the outstanding principal/loan balance. The difference may be that the senior may not live in the home for 15 or 30 years because of their starting age, when they get the reverse mortgage. So in actuality, a reverse mortgage may last substantially lower in time than a traditional 30 year mortgage. The key function of the reverse mortgage, serves to help the senior to free up monthly cash flow to help them pay for other necessary expenses.
Heck, it is not interest free. Indeed it is 3 % higher than regular mortgage interest rate.
@@SecureYourRetirement me and my husband are listening to this video and don’t understand the reverse mortgage. We have 8 yrs to pay of our home. My husband 61 yrs old. Our home is 1600 sq ft home and it’s worth $250,000. . If we want to cash out 40,000 would our monthly payment go up and our year’s.
What about the cost of the RM? Isn’t it basically a refinance? There are closing costs and I don’t think you addressed the possible/probable FEES.
yessir. there are origination fees and closing costs that are tied into the loan, you do not need to pay them out of pocket though
It is one of the most expensive mortgages you can get in terms of fees and interest rates.
How much money does the reverse mortgage agent get? T
At around 14:55 the question was put regarding how it looks like at the time the mortgage must be paid out.
The answer involved an equal comparison of 3% mortgage rate to a 3% real estate value (annual) appreciation. So, at payout, the authority here said that they are at "about the same rate ... the home value will outpace the loan balance growth." I'd like help to understand that.
As I understand it, these so-called "similar" rates are not the same thing. Houses appreciate according to real estate inflation rates, while mortgage interest accrues at a compounded rates. Are these the same even if the rate is the "same"? Do reverse mortgages (RM) not also involve compound interest, just like normal mortgages? If so, then is not the comparison - albeit simplified - not misleading? Does this calculation regard the RM percentage of the value of the house (IE. if the RM is maxed out VS. a small RM)?
Also, I understand that an RM uses a higher interest rate than a conventional mortgage, so should that not be included as part of the answer - especially for neophytes (since we are easily influenced and least likely to think and research)?
I mention this because I am not well versed on the topic, so I don't want to be easily influenced that a reverse mortgage is more of a "good" thing (costing less than the offset of an ever-increasing house value) when sometimes it might not be.
Lastly, this brings me to the last question, which is really the crux of this comment. I notice that most of the videos on this subject matter are by experts in the field who stand to gain by the sales of the product, so I am naturally suspect that conflict of interest could be at play. I think this is exactly why famous actors are hired to "sell" the product. I trust marketing as much as I trust a rattlesnake in my bed.
As was not the case when this video was originally posted, the world is now experiencing significant inflation, and this is the least of it. House valuations are reversing. If we take such industry gurus to heart (eg Michael Barry, Ray Dalio, Berkshire Hathaway, etc.), things are at a cliff edge, despite what so-called experts are saying (that real estate will always climb).
So the final question is this: How do RM's look now - generally speaking - during a global economic downturn when interest rates and inflation are on this rise (consider the 80's compounded mortgage rates), more than a standard local recession, without taking into consideration all "well, it depends" details like how old the owner/occupant is, whether the mortgage is paid free and clear, etc? Thank you.
The devil is in the details. Most videos on the subject miss the mark on some important details. Getting a RM will swallow up your equity you could use to buy a trailer home etc etc. Getting aRM at 65 years old is asking for trouble. As well as 75 in my opinion. I would suggest RMs are best but for 80 plus year olds that are nearing end of life. Suppose you eliminate your mortgage but money is still tight. That’s not a good scenario either. Make decisions that will make life comfortable, not worrisome. If you have to downsize do it. Or rent a room in someone’s house as a last resort. Never loan your money to anyone. Not even $100. If I eliminate my mortgage today my total monthly costs only drops 20% I have high taxes, high energy costs, food, insurance, entertainment, gasoline, car repairs, home consumer goods, personal product costs, landscaping, Etc etc. Assess your financial life completely before jumping into a RM.
Did I miss something so far I haven't heard the reverse mortgage explained ha
Are you saying the credit line can be used to buy another home? I thought moving out voided the reverse mortgage?
moving out does allow for the lender to require repayment. BUT you can take money out to buy a SECONDARY home (vacation home). the reverse has to be attached to your primary residence
You have to live in the home a majority of the year.... usually 6 months or more. It just has to be your primary one.
What would happen if the heir doesn’t want to sell? Are they required to pay off the loan or are they obligated to sell the property in order to pay off the loan?
They can pay off the loan as they would need to do with any loan. They could refinance also.
@@SecureYourRetirement can they refinance even if they don't meet the age requirement?
Yes they are required to pay off the loan plus interest of course. The lender just wants their money how ever they can get it....by family either selling the house to get the money or acquire it a different way....no one cares, just so lender gets paid back. What I'm curious about is the fact that I hear there is ONLY A 30 DAY PERIOD OF TIME ALLOWED,?? WHAT? That's not very long if one HAS to sell to pay back....not good
My husband is 81 ....do I keep paying?
why not sell your home outright ?. you won't have taxes /insurance /maintenance cost . I would pay you 50 cents on the dollar all day long .
You really don't know what your talking about . Think this through. You will loan out 250k today to receive 500k 25 years from now .. Meanwhile if you had left your 250k invested over that same 25 year period it would had compounded to over 1.7 mill (earning 8%) .
Maybe you want to live there.
14:55 "... home value increasing at about three percent and interest accruing at about the same rate..." WHAT??? Who is loaning money at 3 percent these days? I'm thinking 8 percent is more realistic in 2024 and at that rate, compounded, the balance owed will more than double in 10 years.
Look when this was recorded -- it is 3 years ago -- today 2024 - the rates are as you stated about 4 weeks ago -
just about when you get to 62 you find yourself in a sea of sharks. Pros and Cons abound. Keep in mind compound interest in a RM is a b!tch and then you die. Almost all seniors face this situation; equity is there in the home (hopefully) but how to access it without screwing yourself for good is the problem. Leaving to heirs seems like a bad idea. Use it now the cash you worked for. Real outflow of $$ might happen in your last 5 years of life, if one last that long.
You hvenot talked about the interest rates
Others say interest rates are higher than regular loans by around 3% or so..
What about the interest rares
Other people say they are higher than regular loans by 3% or so
Excellent video. House is paid off I think a reverse mortgage will definitely help I'll leave my investments alone
Is reverse mortgage apply to newly built homes too?
it is all the equity you have in the home more than the age
@@SecureYourRetirement can my parents purchase a newly built home on a reverse mortgage program?
@@lisanguyen4596 That's a great question. I would encourage you to reach to Ron Heath the person we were interviewing. He is an expert on this.
Yes. It is called a Reverse Mortgage to Purchase. The clients who use this is seniors who Down/Right Size home purchase. They sell the current home and buy into a reverse mortgage in the new home that is the right size for the senior(s) in retirement.
OMG!!! What has happened to the wealth of the People of America?... Look out People....
I went on ron’s website and input into the reverse morgage calculator the example from interview of 500k value of paid off home for 62 yr old and it showed cash out of 171 k ,on interview he gave 275k as the figure for that scenario.
He said 70 years old, not 62… big difference
Ok i thought 62 ya big diff
@@islandboy9580 hey, you are right! I went to the Mutual calculator, and put in $290k for my house, no mortgage, age 66… It came back with $115,000 available. $12,000 in closing costs!
Is. There. Age. Requirement
Yes David, 62+
Reverse mortages are legal documents which means that you should get a lawyer involved !
Firstly this professes to be about reverse mortgage's and yet they talk about a house line of credit which is not the same, and I find very confusing. NOTE - THIS IS AN AMERICAN VIDEO, AND DOES NOT APPLY CANADIAN REVERSE MORGAGES.
Completely did not understand the video! Had nothing to do with a line of credit. Absolutely did not record this for Canada!
only relation to a line of credit is that a value/loan amount is established (the amount you may get from your home's value). You can take the entire amount in a lump sum . . . or take from this amount as needed . . . like a line of credit. At least that is my understanding.
Hidden fees.my mom only got 200k from a 800k house.it went fast.then when she died the bank took the 800k home for 200k scam! Wells fargo scammers!
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interest accumulates over the period of the loan ? you owe interest on interest . LOL anybody that falls for that is fucked . you never going to pay that off . 275000 on 500000 house what a scam
its only really to be used as a last resort for people who really did save much in life man. yea they wont be able to pay it off, but they will be dead before the bill comes due
1) you owe interest on the amount of money you cashed out.
2) your home value won't stay the same, so it's a win-win situation not a scam.
R.M. is good only if you are 80+ age and unconcerned with the add-on origination fees. other costs, and interest amounts accruing every month/year. If market values depreciate, your original percentage investment for the loan can be wiped out, slowly or rapidly, depending on location and market factors.
DO NOT TRUST ANY REALTOR, BROKER OR LENDER TO PERSUADE YOU OTHERWISE. Caution-Beware!
Why would a realtor encourage a RM when it's not in their interest at all? We only make money if we sell something.
Scammers!