Seniors with Reverse Mortgages, question for you and me!

[yy4me]

If you took one of the much hyped reverse mortgages after being given the counseling, you'd be like my husband and me.

We thought it would be good security if something happened to one of us. Our house was paid for so we used some of the Reverse money to have siding done and a couple of other house projects. Of course you all know how expensive these things are to write. We were shocked. We did it, no blame except on us. We regretted it as soon as we started getting the whopping statements every month.

At the time of writing this RM, the economy was good and with the councilor we decided on the variable rate of interest. Not only would I like to get out of this horribly expensive deal(never happen) but I am wondering if it can be rewritten at a fixed rate.

I fear inflation will catch up with us sooner than we think. The rate will go through the roof.

The lawyer handling my husbands estate matters said she thinks the RM's are the worst thing ever invented. They help some but otherwise, only keep making huge amounts of money for the lenders.

I have tried to reach the company that-at least at first- held the mortgage but they will never call me back. It is always "the lines are busy" Just in case you are wondering who, it is Financial Freedom. Depending on what paperwork you look at, they are either out of California or Arizona.

I know these mortgages have been a good thing for many and I may need it again. For now, I get by in my own frugal manner. Thinks are tight but I pay my bills. Nothing left after but that is a different story.

I would like to know if any of my peers have faced this situation and have an answer.

The RM people don't seem to want to bother to answer me.

Thanks

[bluescribbler]

1. I have no answer

But I'll Kick and recommend in hopes someone else does.

[Phoebe Loosinhouse]

2. Are you sure you have a reverse mortgage and not an equity line?

Reverse mortgages pay you money, not the other way around. When you are concerned about rates rising, it sounds like you are concerned about money you will have to pay back to the bank.

Reverse mortgages do not have to be paid back during your lifetime as long as you stay in your house, or at least that is my understanding. They act as a lien on the property that your heirs will have to pay back when they sell your house or that have to be paid back if your house ceases being your primary residence.

[yy4me]

3. No question, it is a reverse mortgage. When I die, my heirs will

have to pay off the RM from the proceeds of the sale of the house or from whatever means they have within 6 months. I assume that means 6 months after the close of probate(1 year in MA).

It is not an equity loan. I would have no problem with that. At the time we took the RM, we could have done an equity loan but did not. We knew work had to be done on the house and our income was limited so we thought this might be a way to go. NOT. Hindsight is great. The whole house needed to be resided, it is 200 years old and the clapboards were gone and the chimney needed work. Big projects, hence the RM.

[trof]

4. I don't understand the 'whopping bills'.

Whopping bills for what?
Do you mean that the home repairs ate up all the money you got on the reverse mortgage?

[yy4me]

5. The whopping statements are Monthly Servicing Fee, Periodic

Interest and Periodic MIP(monthly insurance premium).
It all compounds and is added to the Reverse Mortgage balance. After a few years, it has been a very substantial amount of money.

There is nothing I can do about the situation except to suggest that people carefully assess their needs before taking one of these.

I would like to leave my house to my kids when I go, not have the proceeds go to Financial Freedom.

Live and learn.

The money we used for the start-up costs of this RM and the repairs was about $40.000. THe money now owed to FF is $62,605.It has been active for about 5 years. Any monies used between initiation and my death will go to FF as my estate is handled.

We took the option of drawing money as needed, not the monthly or other options available. It can be set up to allow a check to be sent to you each month and that money added to the RM

WE have not used anything for almost 4 years.

If I won the lottery, this would be the first thing to go!

I know a RM has its place in the world of finance but I just regret doing it and am stuck. It is an expensive way to keep an open door if you should need money fast. I may need it again and know I can get the money quickly but it is a high price to pay.

[trof]

6. Oh. Thanks for the clarification.

I didn't know how those worked.
I guess you've explored selling, downsizing to a cheaper house, and paying it off?