Question About "Reverse Mortgages" Not Sure This Is Where I Should

ask this question, but I need some HELP! Somehow, some way back in 2000 we re-financed our home for what we THOUGHT was a 15 year mortgage. We wanted some money to help our son start a business. About a month ago I was looking at my payment schedule and realized that my principal wasn't decreasing very much. When I called the people who bought our mortgage I was told that Yes, we did have a 15 year loan, but it had a BALLOON payment attached. 179 payments at around $700.00 a month and the last one would be $67,000.00!!

I FREAKED and then started checking the papers we signed and sure enough in small print there it was. We were told that our last payment would be a balloon payment, but assumed it would be VERY MUCH smaller, given the 15 year mortgage and our paying until 2015. How this happened, or why we got so duped is no longer the issue, because the facts ARE the facts! I've checked several sites that offer mortgage help and basically it's a "no-go" we're stuck!

So I was given advice to get a Reverse Mortgage when I reach 62 years old. I want to get a head start, but wonder if anyone knows where I can get some VERY GOOD information about this. I have received information from several companies and a couple of DVDs, but I SURELY don't want to get STUCK again! It sounds like a good idea, but who knows??

Sorry I can't help you, but there are so many sharks in the real-estate and mortgage industries right now that having not owned a home before I have no idea on how to proceed without getting burned.

At least with renting, I know the sharks a little better.

astronomical. :shrug:

You have time to do this, and can get good points since you've already been paying.

Have you paid on the prinicple of your current loan? That also can be of a help in getting a refi.

If you do refi, be sure it's done through a company that is NOT associated in any way, shape or form with Countrywide or Magnus. Both of these companies are in deep financial shit right now.

Get a fixed for as long as you can (to make the monthly payment lower) and make sure the small print does not preclude paying it off ahead, then add as much as possible as you can to the principle each month. Good Luck whatever you choose to do.

I would never get a reverse mortgage but you have to consider whats best for you.

If they get the loan from countrywide today and it goes bankrupt tomorrow, what exactly do you think that would do to their loan?

of where to send payments.

Am just kind of skeptical of the big loan companies and their recent downfalls...kind of freaks me out. :hi:

I did find this basic info re: home loan sold, that explains the homeowner's rights shold that happen.

http://finance.move.com/homefinance/Mortgages/SoldLoanRealty.asp?poe=homestore

I think that is wise.

I just did, and there's a bunch of stuff. I have no idea what it is.



My first impression is that it's an equity line that you don't have to pay on until you leave the house.


One thing that is always necessary is an appraisal. That might be a tough situation with declining values right now.

1. Death;
2. Sell the home; or,
3. Move out of the home permanently.

Some of these have no payment, some have very low monthly payments. The idea is that you're using your equity/value rather than leaving it to heirs, OR sort of "borrowing" against any life insurance (life insurance collection pays back the loan so the heirs can inherit the home).

Balloon mortgages are usually done with the intent of refinancing before the balloon is due, not coming up with a big chunk of cash.

the whole point of the reverse mortgages, at least the ones i'm familiar with, is that you receive a monthly payment from the bank until you die, but you are allowed to continue living in the house until you die, after you pass away the bank or investment group then owns the house -- the investment group is gambling that you'll die early enough that they will have paid a bargain for the house

however, i don't see why an investor would give a reverse mortgage to someone who stilled owed a honking $67K to a third party


i am missing something here unless the house is VERY valuable

or do you mean to say you need to refinance again? which you will definitely need to do, at some point, if you can't pay off the balloon payment\

it is too late for you, but this is why parents are advised to put aside money for their own home/retirement first, before investing in children's college or business, if the business is a good one, an outside investor could be found for the son, but you will never get a "retirement loan" -- if the son's business takes off (4 out of 5 new businesses fail) then you can ask the son to pay the balloon payment but i wouldn't hold my breath, unfortunately, i've found that when family members borrow money it never comes to a happy ending :-(

what we thought was a 15 year fixed mortgage! What the paper states is that there will be 179 payments at my current mortgage, but my LAST payment must be the $67,000.00! Had I realized that before now, I would have paid at least $1100.00 a month since the beginning. I can still pay more than my regular payment right now, BUT it's not like it would have helped as much if I had done it from the beginning.

We just got SCREWED and I feel like a real FOOL! I don't consider myself stupid and when I was younger I actually worked at some lending places. My note says 15 year mortgage, but WHAT A MORTGAGE! Heads up out there!

you asked about a reverse mortgage, the investment group offering you a reverse mortgage would be one party to the deal, you would be the other party

the third party is anyone to whom you currently owe money secured by your home

that's why i don't think you can get a reverse mortgage

however reading further i realize you just typed the wrong term, you are looking for a refi, not a reverse mortgage to begin with

mortgage. A mortgage that originated with one company and got sold at least 4 times if not 5. This WAS a Refi at the time to give funds to our son. On the disclosure page, the BALLOON payment is not shown. It states the amount of the loan and all the fees that go along with it, then the amount of money we received from the Refi. On a separate page, The Truth In Lending Page, it shows the repayment amount, the one that says when the loan is paid with interest you will owe "X" amount at the end of the loan! THIS is where we goofed up because below the figures it states there will be 179 payment of $681.00 and under that, 1 payment of $67,000.00! Then the page is essentially blank and at the bottom are our signatures!

It's a given that the total owed will be more than the specified amount of the mortgage because the interest accrues and it was OUR mistake not to actually look seriously at the total amount and see that it would have been impossible to owe the final amount. At the Title Company, papers are being pushed at you to either to sign or initial one after the other and since this break-down was very small, we didn't actually pay attention! It's there, we signed but the lender DID NOT specify this enormous amount. During the process of applying no mention was made of this huge amount and I was very specific that we wanted a 15 year loan. And that's what we got... it just turned into a 30 year loan with that added balloon payment. It IS our fault, but a Reverse Mortgage will include the whole amount as it's what our current mortgage is. Instead of what we thought we owed, we found out we owed a whole BUNCH more! Kind of like "buyer beware" and we weren't because we had never heard of this type of thing before. I HAVE looked into it and there is NOTHING we can do even if we took it to the Supreme Court, we signed it.

So yes, I am talking about a Reverse Mortgage... one that will remain until we sell or die. Our son's business didn't prosper, so in a way he's going to pay it back in the end in a round about way. I know this sounds complicated, but we only have one mortgage... it's just much more than we thought we were getting. I have since found out that this happens quite a lot, so I can either sit here and cry or try to do solve the problem. Don't know what to do as yet, and we don't have to do it right away. A Refi is the same thing as a Reverse to some extent, except we will no longer make a mortgage payment with the Reverse. It's not a lot of comfort though.

The rates are still very reasonable for 15 year fixed rate mortgages.

Most balloon mortgage I've ever seen set up have documents that say "Balloon Mortgage Addendum" across the top of the document that is an addendum to the Note, so be careful of that.

Don't know much about Reverse Mortgages except that you are pulling the equity out of your house over time (essentially the bank is buying it back from you--usually it has to be paid off & free and clear first I believe.)

the reverse mortgages i know about the party owned the house free and clear and didn't want to move

hence being paid a monthly sum by the bank to buy back the house was a good deal for them, they get a monthly payment plus they only have to surrender the house when they've died and don't need it any more anyway

If you still owe on your mortgage, the reverse mortgage goes to pay that first.

even if by part of the proceeds of the reverse mortgage.

Otherwise, the prior lender (with the existing mortgage) is in a superior lien position than the new lender doing the reverse mortgage.

That's what I was thinking anyway. I could be wrong--it wouldn't be the first time! :)

I've looked into it a little bit because I want to get a reverse mortgage when I qualify.

The new lender would want to be in first lien position so as to NOT be wiped out by any possible foreclosure upon the first. Also, as a refi and not a purchase money mortgage, they'll want any liens and judgments against the owners to be paid off as well.

I just can't believe we were SOOOOO Stupid, but I am thankful that I started questioning my balance and caught this before 2015!!!

No one can read all those papers. Besides, they've been defrauding people.

if you can afford it. Reverse mortgages only provide money on your equity and it sounds like you'll still have a sizeable debt on the current loan.

If you do go with a reverse mortgage be sure to hire a lawyer to review all of the paperwork before signing. The lawyer is working in your interest.

on any reverse mortgage agreement.

A relative of mine did a reverse mortgage several years ago. She was in failing health and did not expect to live more that five years. The plan was that her life insurance would repay the bank that lent the money of the reverse mortgage so her daughter who was caring for her would inherit the house free and clear. The reverse mortgage was for much less than the house was worth, since they were essentially living in it rent-free while the bank was buying it.

The relative outlived the mortgage, meaning that at the end of the 15 years, the lender acquired the house, putting both her and her daughter on the street.

Three or four years ago, another family member was tempted to do a reverse mortgage, but discovered the results would have been the same if he outlived the loan. He decided against it.


Tansy Gold, cautious

Your heirs can sell it or you can sell it. I did find out a lot at AARP! Reverses HAVE changed because I DID hear some very bad stuff about them before and how they took people's homes away.

Decisions, decisions!

I plan to use the person who did my refi. She was really good on that. Plus, I think there's a requirement that you attend a class about reverse mortgages before you get one.

Personally, I don't want any money. I just want to be able to live rent-free. I don't have any kids to leave the house to, and no one in my family really needs it.

go ahead with a Reverse. At the AARP web site it does give you tips on which company to deal with, one was Wells Fargo and I forgot the other, but I did email them for information.

But when my parents died, I never got a penny because they didn't have anything. My father remarried after my mother died rather young and everything went to his 2nd wife. And my husband's father is gone, but his mother is still living but she doesn't have any money either. I never expected anything, but I think my kids might be surprised if we decide to do this. They will get something no matter what because we do have enough equity in our home right now. I just can't take that huge payment and we have helped both of the financially, our son for his business and our daughter with a down payment on a house.

And no, we ARE NOT RICH! I just was very frugal and saved when I was younger and we were able to help them out at the time. Kids today don't understand money as we once did though. I'm not bitter about helping them, but I can't say I know if we'll get any repayment either.

Life goes on!

if you are getting close to age 62 and will only be living on retirement income.

Lenders are tightening up income/credit history requirements to qualify for loans now.

Another possiblity is selling/downsizing and getting out of a mortgage altogether if you have any equity left. If you can sell now and rent for a year or two you will be able to buy something much cheaper and the interest on your money will pay your rent while you wait for property values to come back to normal. That is if they went up in your area.

good luck, from someone who also got taken by a bait/switch mortgage broker.....

I did a pretty comprehensive search on this for my father a few years back, and the AARP site had the most balanced info, as they weren't trying to sell you anything.

I agree with others, so long as you've been making your payments on time and therefore are a good credit risk, simply refinancing to a new, 15-year fixed rate (and no balloon payment) is a good option. Ensure that you have no pre-payment penalty in the contracts and you can pay it off quciker if you so choose.

You can get a 20, 25 or 40 year fixed. After 10 years with an adjustable when rates were dropping, bottomed and then just started to go up, we refied for a 20 year fixed with Ditech. Quick and easy.

Call your local Area Agency on Aging and ask for advice on reverse mortgages.

lot of information from them, Reverse mortgages don't seem all that bad for us right now. We will need to wait a bit, but since we also own 5 acres of land further south, the reverse mortgage will keep us from paying ANY mortgage payment as long as we pay taxes and insurance. Then, IF we decide to sell this place, what is owed will be taken off of the selling price.

Since this is a primary residence, I don't think capital gains will have to be paid on anything but what we make. I don't plan on moving though, even though it IS Florida my little community is quiet, a bike ride to the beach and after this housing crunch will probably be worth more in the end. Plus, when the housing crunch ends we will probably be able to sell our 5 acres.

What I haven't found out yet is IF we do the Reverse, can we pay it down should we sell the acreage!

But thanks so much, I'm glad to have all the information and even though my back is breaking from sitting here most of the day... I HAVE learned a lot. I do wonder how long the Reverses will be available though. I still can't believe the "balloon" thing though, but have found out that it's happened to many many people! What a rip, and I now will read the smallest print EVER!


Thanks again.

Into another 15-year?

after all as one person told me, we spend money to raise our kids and send them to school, college and lend them money, so why worry about leaving them all the rest? Don't get me wrong, I LOVE my kids, but in the end they will probably get a lot more than "their" parents did, meaning us. Which is nothing.

I never waited for my parents to pass away to receive a wind-fall so if they get stuck with that payment between the two of them it won't be so bad for them.

At least for her:

She is divorced, living alone, no income aside from SSI every month. It was too hard for her to make her $600-ish a month house payment.

So, she looked into a Reverse Mortgage.

Her house was appraised for fair market value--I believe it was appraised for around $100,000.

I know HUD was involved in some way, but I'm not exactly sure. At any rate, they (the reverse mortgage people), gave her $50,000 - 1/2 the appraised value of the house. They keep the other $50,000 or 1/2 of the value.

She got the $50,000 in a check--I don't think any taxes were taken out. She had to spend about $5,000 of the $50k on repairs to bring her house up to appraised value--got the roof replaced, fixed the floors, etc.

Now, she has no house payments EVER. She lives in the house payment free forever.

Now, if one of the following two things happen:

1) she dies
2) she sells the house

then she, or her estate if she dies, has to pay back the $50,000 that she was given by the reverse mortgage people in order to get the title back. Otherwise, HUD takes over the house and will sell it.

Their selling point behind this is: If your house increases value to $200,000 by the time you die or sell the house, you or your estate only have to pay back the original $50,000.

However, if your house decreases in value to $60,000 by the time you die or sell the house, you still have to pay back the original $50,000.

To ensure that the house always stays in the family, my mom got a life insurance policy on my grandmother for the amount of the payoff--$50,000 and change. That way when my grandmother dies, my mom can pay HUD or whoever the $50k and keep the house.

It's really not a bad deal for older people with a need for cash up front. My granny, unfortunatley, kind of blew through the cash and has nothing to show for it now.....

be at least 62 to even get a loan, but we'll make that by the time 2015 rolls around! I do know the first Reverses took the home away, but now you can buy that extra insurance.

Unless the polar ice-caps melt faster than expected, my home should still be here by then. By that time it will be "prime" beach front!! Right now we're about a mile away! I've gotta keep laughing or I'll just come apart because I'm really upset about this. But I'm calling Senator Dodd's number tomorrow!

1 888 995 HOPE, I am sure you can find it, it was all over the TV today.