Yes, there is a catch.

[QRTRHRS]

Reverse mortgage that is. The catch is that the red tape, costs and results are not worth the time at least for us.

Without going into to much detail, we downsized to a smaller property but did not have enough to put up a garage and do some other things so we looked into a reverse mortgage because we do not have too many options for financing. Part of that process is to go through a counceling session to make sure you understand the ramifications. Only, after a couple of weeks of searching and numerous phone time, I found out that there is only one company doing counceling in KY but we were out of their service area. The option was to do it via telephone. The next hangup was that my wife is deaf and I have my hearing issues as well. We finally got hooked up with a company that left us use our "Caption Call" phone (it spells out the words on a screen in pretty much real time).

During that time, HUD reduced the amount of monies that could be lent so everyone was trying to beat a deadline. More waiting. We finally got through the counceling which by the way costs 150 bucks.

Then there was the home appraisal. Five hundred seventy five bucks for that and their appraisal was lower than what I am pretty sure what we could sell for. I have not seen anything on paper and do not know if I will get anything. The appraiser was local but was contracted by a national company who told me the lender was responsible to provide me with a receipt? Uh, what about an actual report?

We had to provide HUD 1 statements for the last two previous residences and when we bought and sold them. Our current place is comprised of two lots totaling about four acres on one deed. That had to be researched. They wanted to know about zoning (there is none in my county). We have horses so even though it is only four acres, we are insured as a farm to provide liability on our horses. They wanted that changed even though the numbers would be the same. They suggested changing it for the underwriter then changing it back later?

After almost six months of this, we were advised that we could get 25k and 29k set aside for taxes and insurance. Oh', you would get 4.6% interest on that set aside.

I have read that one of the complaints that people have with reverse mortgages are issues with the lender paying the taxes and insurance. I have always paid my own.

So, so much for the dream garage.

 

[tjkubota93]

Reverse mortgage sounds about as legit as a title loan on a car to me.

 

[QRTRHRS]

Reverse mortgage sounds about as legit as a title loan on a car to me.

They are legit and you do continue to own your home but when it is sold by you or your estate, the loan comes out of the proceeds. They must have both spouses on the loan if that is the situation then if one should pass then the other will not be kicked out. The issue for me was although it is a government backed program, you still have to deal with a bank and banks are in the money making business.

 

[Bird]

We've had a reverse mortgage now for 3 years. Yes, we had to pay for the "counseling" which cost $99. They gave us a list of companies and phone numbers, including one that was free, but that one had a couple of months backlog, so it would have been a long wait. And we did it on the phone, with the phone on the speaker. And we paid for the appraisal, which I think was about $400. And the appraisal came back just a little higher than I expected. So our mortgage is at 5%; at the time I were paying the regular mortgage at 4.5%. And as mentioned above, you have both spouses on the loan, and the amount they will go is based on the age of the younger of the spouses.

Another thing is that it does make a difference as to which company you deal with. One that advertises on TV all the time told me he thought we'd have to come up with several thousand cash to qualify, and most of them do everything on the phone. The company we went with had a representative (female) come to the house and she did nearly all the paperwork herself, and instead of us having to come up with cash, they gave us a few thousand in cash.

And yes, we pay the taxes and insurance premiums ourselves. I did, at least once, receive a letter from the mortgage company with a phone number to call if we had a problem paying those, but since I didn't call, I'm not sure (can only guess) what they would have done. And we do get a "Monthly Reverse Mortgage Statement" in the mail each month, so we always know how much the mortgage has grown.

 

[QRTRHRS]

Glad that it worked out for you Bird. When we first looked into this, we had a large list of counceling providers to choose from. However, when I started calling, none of them were providing that service anymore. The people I conversed with would suggest leads, some of which I had already struck out on. Apparently, the last one to do counceling is in Bowling Green, KY which is a couple of hour drive for me but they said that I was not in their service area?

The 150 that I paid seems to be common with over the phone interviews. The company I did find was based in Michigan and great to work with.

I struck out on the first lender having not owned our house for at least six months. I don't recall how I hooked up with the one I have been working with. It all went smooth at first but as we got into it, they got more and more difficult. It was always the underwriter this, the underwriter that.

My fax/printer died prematurely so I had spend more than I wanted to just sending documents.

I expect to hear from them on Monday. I intend on contacting some more lenders since the counceling certificate is good for a year or so I think. Not sure since I did not think to get a clear answer about the appraisal paperwork. The lender claimed that HUD regulates whom they work with. The name of that company was Landmark out of Portland, ME. They contracted with a local company. I believe that the actual person doing the appraisal told me that Landmark would provide the documents after it was completed. I will likely be making a bunch of calls next week over that issue.

In the end though, due to HUD cutting back on the amount of monies, I won't get what I originally was counting on anyway.

 

[txdon]

We've had a reverse mortgage now for 3 years.

What % of the value of the house were you able to get on the reverse mortgage?
I'm sure they have it figured out that the bank will make money no matter how long you live, but do you see a situation where the bank is taking a risk?

 

[oosik]

I looked into a reverse mortgage about five years ago. Totally impossible in my case. Max lot size allowed by reverse mort. was ten acres. Current zoning on my property requires twenty acre minimum lot sizes. Fortunately, I was not serious, just curious, and it only took about two minuets to find out this info.

I read Bird's post and all the other stories - Makes me wonder if all these reverse mortgage situations are really legit. Such a WIDE range of variables - sounds like folks could be sucked in and not even know it.

 

[Bird]

What % of the value of the house were you able to get on the reverse mortgage?
I'm sure they have it figured out that the bank will make money no matter how long you live, but do you see a situation where the bank is taking a risk?

I've forgotten exactly what the percentage was but I think it was about 65-70%. In our case, it took longer than usual for a couple of reasons. One was that when we bought this place, they only showed it in my name. That surprised me, but the realtor said, "It doesn't make any difference." Well, since I have a will leaving everything to my wife, if I die first, we went along with the realtor. So that had to be changed to get her name on the deed/title, etc. before getting the reverse mortgage. Secondly, the appraiser had a new computer system; thought he had sent the appraisal, but it didn't get to the mortgage company until I called him to ask what happened. Third was that since this house has an attached "shop" under the same roof, the mortgage company asked the appraiser for "comparables" after he sent in his report.

And of course we had been here about 9 years and I'd been paying more than the minimum or scheduled payment each month, so did have some equity built up. So I can understand why the OP is having a problem getting a reverse mortgage.

And as they advertise, you DO still own your home. You can pay off the mortgage, or make payments, if you wish. You can sell the home just as any owner would with a mortgage; just have to pay off that mortgage when you sell.

And I agree, Don, that the bank isn't taking any big risk. The size of our mortgage has grown, of course, but the value of the property has increased, too, so the percentages are probably still about the same. We get a lot of mail from reverse mortgage companies asking us to "refinance" with them, but the fact is that they probably couldn't refinance and give us any more cash.

The only thing "wrong" with a reverse mortgage is that we're spending part of our daughters' inheritance.:laughing: And if we should live long enough, we might spend it all.:laughing: