1. It isn't a license
2. You're more fond of these reverse mortgages than most.
3. You don't seem to be smart enough to get all your thoughts in one post. (or to make that first one coherent.)
You don't seem to understand reverse mortgages. I am annoyed by stupid people who don't understand the concept.
Do not insult my intelligence. Having many thoughts is a sign of creativity. It actually is a sign of intelligence. I don't really care enough to organize them in a straight line for somebody like you. This isn't a thesis paper I'm writing.
You have done nothing to explain why reverse mortgages are rip-offs. I'm annoyed by your blatant generalization that they are all bad deals. Blanket generalizations are signs of narrow minds & low intelligence.
And you still haven't explained why you are qualified to give financial planning advice. You just decided to harp on license vs. certification as a smokescreen.
Next you will point out a mispelling or grammar mistake, and ignore the content. Fine.
Or you will go into another personal attack and ignore the content. That's real smart of you.
Nachoman
05-13-08, 07:57 AM
I suggest you both lay off the personal attacks. It's an interesting topic worthy of further discussion.
voltman
05-13-08, 09:25 AM
I've moved here (San Diego, UTC area) 3.5 yrs ago from Toronto, Canada. Rent has steadily gone up from $1200 to $1400 a month here; quite expensive. I've been looking at house prices too. $600k+ for a fully detached house, or $300k for an old 2 bdrm condo. Yikes! :p
Go with the condo!
chimivee
05-13-08, 10:46 AM
You have done nothing to explain why reverse mortgages are rip-offs.
Argument aside, I'm interested to know as well. Just curious.
umd
05-13-08, 10:50 AM
Argument aside, I'm interested to know as well. Just curious.
+2
roadfix
05-13-08, 11:10 AM
Being self-employed most of my life and not having planned my financial future wisely, as far as retirement goes, my house may be the only major source of retirement income I might have to rely upon when one day I stop working. Prop taxes will probably eat up most of whatever I'll get from social security. A reverse mortgage is one option I will definitely look at.
I don't owe a dime on the house since a couple of years ago (15-year mortgage) so the equity on the house is the only hope I've got. Meanwhile, I'll probably work for another 15 years and save even more for retirement before I become a full time roadie. :D
Extort
05-13-08, 09:22 PM
Meanwhile, I'll probably work for another 15 years and save even more for retirement before I become a full time roadie. :D
as long as we can all bask in your rays of golden (years) light... then all is well...
Reverse mortgages: (from wikipedia (http://en.wikipedia.org/wiki/Reverse_mortgage))
not that difficult a concept to understand and certain people can benefit from this type of plan. The trick is finding a broker that is not going to screw you on the initial costs. Generally, you pay the broker to file the paperwork for you and they also work a commission into the deal with the lender (e.g. points) so they make out on both ends. If the borrower is not careful, they can get stuck with a higher interest mortgage than they desire, which eats away at the principal of the home equity, potentially decreasing the monthly payment to the borrower. Lastly, if the loan is at 4%, but the house is appreciating at 6%, the heirs of the deceased will need to obtain their own independent appraisal to determine the value of the home prior to the lender simply taking the property as an REO and selling it at a profit (thus the lender makes out on two fronts)...
sorry about the long winded explanation... PM me for more details, or talk to a real financial planner/accountant/attorney
maximan1
05-13-08, 11:48 PM
I have a job
rooftest
05-14-08, 01:44 AM
Argument aside, I'm interested to know as well. Just curious.
Basically, it is due to the lack of flexibility. First, living on borrowed money is never a good idea.
Let's ignore the huge fees on these mortgages for a minute and focus on the interest rate. These loans feature adjustable rates.
So, if I had a $400,000 house, my monthly payment would be about $1800 a month - not too hot. If I live for several more years, there's a good chance my loan amount has balooned to a point above what I owe on the house - so I can't sell my house to raise more money.
This could get long quickly but - If I have home equity to live on, I should take a second mortgage out, paying down that mortgage with the proceeds. If (and this is pretty likley) that's not going to work due to my low income, I should sell the house and buy cheaper, or rent. Then I've got access to ALL my equity (rather than getting half and letting the rest get eaten up by negative amortization.)
kuf
05-15-08, 03:01 AM
Basically, it is due to the lack of flexibility. First, living on borrowed money is never a good idea.
Let's ignore the huge fees on these mortgages for a minute and focus on the interest rate. These loans feature adjustable rates.
So, if I had a $400,000 house, my monthly payment would be about $1800 a month - not too hot. If I live for several more years, there's a good chance my loan amount has balooned to a point above what I owe on the house - so I can't sell my house to raise more money.
This could get long quickly but - If I have home equity to live on, I should take a second mortgage out, paying down that mortgage with the proceeds. If (and this is pretty likley) that's not going to work due to my low income, I should sell the house and buy cheaper, or rent. Then I've got access to ALL my equity (rather than getting half and letting the rest get eaten up by negative amortization.)
Again, it looks like you do not fully understand a reverse mortgage. You are not borrowing money. It is money you have accumulated that is sitting in real estate.
You can also be paid in several ways:
-all at once, in a single lump sum of cash;
-as a regular monthly cash advance;
-as a "creditline" account that lets you decide when and how much of your available cash is paid to you; or
-as a combination of these payment methods.
(Additionally, if you're not supposed to borrow money, that means you shouldn't have taken out a mortgage in the first place.)
You have only supported my point that the best way to be able to live out the rest of your years in the house you raised your kids in, the one that holds memories for you, is to take out a reverse mortgage.
You only seem to be thinking of the person who inherits, by being so concerned with what they leave behind, and not thinking of the retiree's quality of life.
genedoc
05-16-08, 07:17 AM
For us, the reality is:
1. We will still owe several $100K on the house when I retire and will not be able to afford the payments on SS.
2. I live above the smog layer and have a 200 degree view of much of the valleys, Catalina (on a very clear day). I'm not retiring in order to move to a house no better than I had 20 year ago!
3. The equity in the house will very likely be a significant portion of my retirement assets that I will need to tap into to 1: make the mortgage payments, 2. by new bikes.
4. I doubt will qualify for a $1M equity line of credit or a loan. I'll want access to all/most of the equity out of my house.
5. I earned it, I'm spending it. The kids get my bikes and whatever is left.
My choice seems to be reverse mortgage or move to another state.
My retirement goal is to not have to eat cat food.
If my plan fails and I do have to eat cat food, I want to eat the canned stuff at least on weekends.
IanInSD
05-16-08, 01:01 PM
My retirement goal is to not have to eat cat food.
If my plan fails and I do have to eat cat food, I want to eat the canned stuff at least on weekends.
If that's the case, make sure you select Fancy Feast with the flaky bits - it actually looks like beef (or some kinda of beef). You'll also need to stock plenty of toothpaste and/or mouthwash as my cat's breath seriously stinks.
Ian in SD
Turtle1
05-16-08, 01:11 PM
I never want to feel the sting of a monthly mortgage payment.
umd
05-16-08, 01:23 PM
I never want to feel the sting of a monthly mortgage payment.
A monthly rent payment stings just as bad, if not worse eventually.
magicant
05-16-08, 02:31 PM
A monthly rent payment stings just as bad, if not worse eventually.
You can avoid both if you live in a van down by the river.
http://home.mchsi.com/~beyondbelief/farley.jpg
Dubbayoo
05-16-08, 02:49 PM
My retirement plan centers around the assumption I will inherit my parents home in Atlanta, which is paid for.
Turtle1
05-16-08, 04:22 PM
A monthly rent payment stings just as bad, if not worse eventually.
Oh, I don't pay rent either. My house is paid off and was graciously donated to me by my loving mother.
roadfix
05-16-08, 04:24 PM
Oh, I don't pay rent either. My house is paid off and was graciously donated to me by my loving mother.So I suppose your prop tax is almost next to nothing, relatively speaking. :)
Nachoman
05-16-08, 04:32 PM
I'm working hard to pay off the beast of monthly burden.
roadfix
05-16-08, 04:40 PM
I don't think Mr. Chiro is moving out here after all...
Turtle1
05-16-08, 04:41 PM
So I suppose your prop tax is almost next to nothing, relatively speaking. :)
The property tax and homeowner's insurance is manageable for me and my meager income :P There's no way I'd be able to afford a mortgage on what I make.
DScott
05-16-08, 04:52 PM
I don't think Mr. Chiro is moving out here after all...
The view from chiro college:
http://sprott.physics.wisc.edu/pickover/oz.jpg
Grumpy Pig
05-16-08, 06:31 PM
If that's the case, make sure you select Fancy Feast with the flaky bits - it actually looks like beef (or some kinda of beef). You'll also need to stock plenty of toothpaste and/or mouthwash as my cat's breath seriously stinks.
Ian in SDI'll try it out on Heartbreak. The food, not the mouthwash. It couldn't be worse than the buffet at the Cookery in Lebec.