Cowboy!!! Where are ya????

gina_in_flSeptember 10, 2005

Dumb a@@ BF wants to get a reverse mortgage on his house he owns. His folks live there for rent couple hundred less than his mortgage payments (dumbA$$ me lets him stay here for janitorial -- pool boy, lawn guy, companion on cruise guy here)

He won't sell the house outright because his folks only pay $535 in rent. Can prob get $250K, owes $41K. Folks are old enough to get medicare/medicade??

I say sell house, supplement medicare/medicade, put them in retirement home with meals, utilities, etc., and supplement them if need be.

He says "can't put folks out, but would love to sell house"

THEN.. the dumb$hit says he would like to take out a Reverse Mortgage!! IF.. in a perfect world we lived, I'd say sell to folks and let them take out the reverse mortgage, but meybe I'm not thinking straight, or maybe I'm just toooooo opposed to taking "free money" that's gonna cost you more in the long run.

Can you please give him some words of wisdom???

All guys won't listen to a girl, but the WILL listen to a guy!!!

Thanks

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joyfulguy

It ain't "free" money: there isn't much of that around.

It's converting part of an asset that you own into dollars that you can see, either in your hand for spending, a bank account, invested elsewhere, or whatever.

A reverse mortgage may be useful for some seniors who are short of money to live on, but have a large asset tied up in a home that could provide them with a supplement to their income, while reducing the value of their asset. And aren't too heavily concerned with leaving substantial value for their offspring.

That reduction in value grows at an increasing rate, as they must withdraw more mney as time goes along to pay the interest on the increasing amount owing in the mortgage.

Many advisors in our area say that one should examine a proposed reverse mortgage's terms with great care, for some who offer them have some distasteful terms included.

HTH, Gina.

ole joyful

    Bookmark   September 10, 2005 at 12:52PM
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cowboyind

Hey Gina, sorry I didn't see your post for a few days.

The basic idea behind a reverse mortgage is, as Joyfulguy said, that it can help a retired person who has limited income but a large asset in the form of a home. Typically when the person dies, the reverse mortgage would be paid in full in a lump sum by the person's heirs, who would sell the home, pay off the mortgage, and keep whatever proceeds of the sale, if any, are left over.

You said your boyfriend lives with you. I assume his "official" place of residence is at the house where his parents live. It'd probably have to be, because most lenders will only do reverse mortgages on owner occupied homes. This fact that he doesn't really live there would seem to be somewhat of a gray area, and might be something you want to discuss candidly with the lender, because in most cases the loan is payable in full if the person moves out of the house. What if he decides he wants to buy some other house to live in, say, if your relationship with him ends? Then he's got a problem because he has to pay off the reverse mortgage in order to do that, probably.

Here's the other thing: You didn't say how old your boyfriend is, but since his parents are still around, I'm going to assume he's not all that old, and since both of his parents are living, he probably has decent longevity genes, too. So, he's going to be around for a while. That limits the value of a reverse mortgage, and will restrict the amount a lender will lend on one.

I assume what he's thinking is that with the reverse mortgage he can take an advance against it, pay off the balance still owed on this house, and then get a check every month instead of writing one every month. That sounds good, but that's not free money - it's all borrowed money that he's paying interest on, and when he eventually does sell the house, it just reduces what he gets from the sale.

Just from the facts as they appear here, it does not seem as though a reverse mortgage is going to do that much for your boyfriend. His borrowing ability will be reduced because he's not that old, and if he winds up paying the mortgage off himself because he sells the house someday, then he's going to have to pay off a bunch of interest just to have a clear deed to the house. Then, too, doing the reverse mortgage now when he apparently doesn't really need to do it means he will not have that option later if he does really need it. Right now he's got $210,000 in equity in a house and he's got many years of life left. Why start chipping away at that equity by paying ever-increasing interest on a big reverse mortgage balance? I can't think of a good reason to do it. When he's 80, there may be a much better reason to do that, and it'd be nice to have that option then rather than to use it now.

    Bookmark   September 17, 2005 at 2:11AM
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joyfulguy

Cowboyind makes a very good case, it appears to me.

I agree 100%.

o j

    Bookmark   September 17, 2005 at 4:22PM
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gina_in_fl

+UGGHHHHHHHHHHHHH... That's what I've been contending.. Reverse mortgage is for little old lady that has $799K equity, not for someone that only has $200 equity. He jumped up and down before reading your response, just because I called him an A$$ and I criticized him for it. I've bought him a moving back to home truck before, I'll do it again. This is insane!!!

Uggh!!! Why do they think New Orleans should be rebuilt? Trump is scapping up property.. guess he thinks that it won't happen again for a while. I don't either. Might be a good investment.

    Bookmark   September 24, 2005 at 12:02AM
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gina_in_fl

Big long thingee got rejected on account of 'same subject'.

Any suggestions how I can get rid of person? Already bought him a moving truck, already threw a lot of his personal stuff into his truck, already got a restraining order, Bad Penny... keeps coming back. Prolly my fault from wanting to have a warm body around, but now I'm having second thouthts.

:(

Gina
Maybe I can keep myself from further embarassment if you could email me in private.

    Bookmark   September 24, 2005 at 12:18AM
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cowboyind

I'm not sure if you're serious or not, but I wouldn't let the disagreement over the reverse mortgage ruin your relationship. You've discussed it, offered your opinion and solicited others, now why not just let him do what he feels is best?

There is no harm in him discussing the idea of the reverse mortgage with a bank which offers them. Every situation is different, and the comments you got here from Joyfulguy and me were of a general nature and based on limited information. Maybe there is a program out there which he could take advantage of.

    Bookmark   September 25, 2005 at 1:56AM
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lysansinnerchyld

I know this is off-topic, but....
How can you suggest a man dump his parents in a retirement facility and sell a home they live in? Seems a little cold to me...but what do I know?

    Bookmark   January 1, 2006 at 4:06PM
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