What's behind reverse morgages?

@celticeagle (114391)
Boise, Idaho
September 25, 2015 8:42pm CST
I have heard about reverse mortgages for a long time. I recently read a piece about them. I always think 'when something is too good to be true it usually is'. Come to find out there are several options people have in paying this back. But my big question is why would they wont to do this in the first place. Have a lot of money that you can either choose to take all at one or in cash line at the bank. But, there is going to come a time that that bank or lender is going to want that money back. You have it until such a time as you pass on and then the house is taken, or these people's kids have to pay it back or they can refinish it into another mortgage. But, to me it is like snubbing your family and making them pay for your last years. If they don't want the house I guess that is okay and it is just taken for payment on the loan or whatever. But, there is always pay back on something like this and most parents don't want to saddle their children with added expenses after they pass. What are your thoughts on this and do you know of another pay back plan that doesn't involve the kids?
8 people like this
11 responses
@allknowing (55182)
• India
26 Sep 15
Most children leave homes seeking greener pastures and they may not want that house in which case banks stand to lose but not alwlays. The price of real estate increases at an exponential rate. What is not known however - may be just me - whether the family - if they are interested in the property- pay what the bank paid or at the prevailing market rate at the time the property is given back to the family.
2 people like this
@celticeagle (114391)
• Boise, Idaho
26 Sep 15
Maybe they would do a up date refinancing.
1 person likes this
@allknowing (55182)
• India
26 Sep 15
@celticeagle A bit more research is called for to know the facts.
1 person likes this
@Marcyaz (36125)
• United States
26 Sep 15
Even if children would want the house I am sure there would be a much higher price than what the parents were given.
1 person likes this
@sharon6345 (106739)
• United States
26 Sep 15
I don't have a clue about anything like this. I rent where I live.
2 people like this
@celticeagle (114391)
• Boise, Idaho
26 Sep 15
So do I. I am just curious.
1 person likes this
@Hatley (157944)
• Garden Grove, California
26 Sep 15
me eikther Sharon as I iust rented now am in a retirement center pay rent and board from my social security and SSI
@simone10 (22269)
• Louisville, Kentucky
28 Sep 15
I've heard of a reverse mortgage but didn't know exactly how it worked. I think if all parties involved are okay with it, then no harm done. However, I can see how it could become a hot mess.
1 person likes this
@celticeagle (114391)
• Boise, Idaho
28 Sep 15
Yes, no harm done if all in agreement. Sure could become a problem later regardless. Things could change.
1 person likes this
@owstalaga (4200)
• Philippines
26 Sep 15
Eh, I've never heard of reverse mortgages until now. Guess I better read more about it. All I can say is, I'd rather work til I have the money to pay for what I have to buy than take loans and have a hard time paying it off until I die.
1 person likes this
@celticeagle (114391)
• Boise, Idaho
27 Sep 15
That is a very smart way to do things. This is for people who own a home and have nearly paid the mortgage on it. For retirement purposes.
1 person likes this
@owstalaga (4200)
• Philippines
27 Sep 15
@celticeagle Oh I see. I still need to read more on it. Hope I remember to do it. On second thought, I think I need a better English vocabulary. That Wikipedia article is making my nose bleed.
@LeaPea2417 (14690)
• Toccoa, Georgia
26 Sep 15
I have heard that reverse mortgages are not wise to do and is like a scam.
1 person likes this
@celticeagle (114391)
• Boise, Idaho
26 Sep 15
Pretty much. Someone has to pay it back and the bank doesn't give out money for free.
1 person likes this
@vandana7 (57192)
• India
26 Sep 15
Any asset is for using in adversity. Passing it on to others, i.e., children is a secondary objective. The returns from real estate assets are for enjoyment as long as the person is working and has enough for survival. If those three rules are understood, there will not be many problems. As things stand, people take reverse mortgage for enjoying. Those are not returns. The equity built on that house does not qualify as returns.
1 person likes this
@Susan2015 (18326)
• United States
26 Sep 15
Being in the financial industry, many bankers do not like the reverse mortgages. If someone doesn't care what happens to them after they leave this earth, that would be one reason for someone to get one. Because the money does have to be paid back or they take the home.
1 person likes this
• United States
27 Sep 15
i find 'em appallin' myself. a rip-off to say the least. if'n one has to go into a nursin' home fer an extended rehab - they lose their home if'n the family's not the funds to pay the mortgage company back.
@Hatley (157944)
• Garden Grove, California
26 Sep 15
hi@Celticeagle I haveheard horror stories about reverse mo rtges I never owned a house so thatdoes not affect me but my best friendtoldme about p eop;e having to pay that back and getting in truble themselves to thepoint that theyare broke
@owlwings (38090)
• Cambridge, England
26 Sep 15
I took out a loan secured on the house (which is what a mortgage is) to help out one of my children. That loan ends next April, so we will no longer have that charge on our property. Of course a 'reverse mortgage' is rather different. The money loaned is never paid off until the house is sold. I think that, provided the children (or any beneficiaries) are fully aware and in agreement with the plan, then that is OK. It is when someone takes money out of the estate without telling the beneficiaries that problems and bad blood can arise.
@Marcyaz (36125)
• United States
26 Sep 15
Since this is something thought up by the money people it stands to reason they are not going to lose any money so who really makes out on this deal, not the family that is for sure. I don't like this idea at all.