Posted on 12/02/2010 4:02:05 PM PST by plinyelder
It has now gotten to the point that I and my better half are grasping at straws to stay afloat.
(When you start using credit cards to purchase food .. You KNOW that you are in trouble)
I have now been out of work for over two years and my better half (who will be called Jane for now) is working part time.
Jane is seventy years of age, I am fifty nine.
Our home is, of now, valued at around $200,000. (It Was at $224,000 not long ago)
We owe $104,000 on the home, have a $15,000 second mortgage and around $10,000 on Credit cards.
I see no prospects for employment, anytime soon.
Jane has $1,400 a month income from SS and about $800.00 a month from her part time job.
I guess that my question would be: Is there any upside to taking a reverse mortgage on our home and 'exactly' what and how does a reverse mortgage work?
Do interest rates Kill you after awhile?
(If you want to sell or move?)
ANY advice would REALLY be appreciated.
Get a lawyer and plan a bankruptcy. Hurry or there will be no docket space left.
Sell the house, pay all the bills, cut up the credit cards and downsize.
Based on these numbers you wouldn’t have enough equity to qualify for anything. Use the AARP calculator to see but I don’t see anything you can do with this.
I understand the theory of Reverse Mortgages — you are essentially selling your house to the bank and they collect when both of you go to the Bye and Bye. But I think you need to own the house free and clear.
The biggest downside I have heard of is the rates aren’t very good. Of course, you are leaving nothing to the kids but I have always thought that it is everyone’s duty to coordinate kicking the bucket with hitting zero in all assets.
Best of luck to you FRiend.
I think it is worth a look for you, if you are old enough.
i am very sorry for your circumstances. I am trying to avoid that by paying on my mortgage early (will be paid off next year about this time). But there has always been the chance I get caught house rich and cash poor — everything is a risk.
God Bless you...you still have options...try reselling products on ebay to bring in extra cash....We did that when times got tight and my wife still does it...
BTW, I met Clark Howard today at the Roswell, Ga Walmart...he was doing a charity raise for toys for Christmas, broadcasting from the front of the store...FYI..I donated a toy....
Selling the house in this market, and particularly at this time of year, is probably not an good option, especially considering that even if the house were to sell, there would still be costs for a roof over their heads.
A reverse mortgage is essentually selling your home in order to receive a monthly payment. At the end of the mortgage period, they own your home and you stop receiving the check.
The underlying assumption, the thing that the mortgage company does not want you to know, is that the “gamble” you are making is that you will not need to live in the house at the end of the time period.
That could be possible because you have made other living arraingements such as relatives, renting a smaller place, purchasing a trailer, in a nursing home or possibly, that you will be dead before the end of the term.
In exchange, you receive a monthly amount.
The VALUE proposition is in the eye of the beholder. Some would rather do a reverse mortgage than to lose the house due to failure to pay and forclosure. Some are so emotionally attached to the house that they can not fathom the idea of leaving.
As always, get multiple bids, sound legal advice, and talk with a tax attorney about possible ramifications.
I stand by my original sentiment. Just my opinion, everybody’s got one. Buy cheap or rent. Interest kills.
I pray that FRiends will give you good advice and lift the financial burden off your shoulders.
Damn straight.
SnakeDoc
We were offered $134,000 with no up front costs.
This would allow us to pay off the home and second mortgage, along with some on the credit cards.
Jane will still have the $1,400 a month SS and that would allow us .. 'at least' $900.00 a month free to purchase food and other necessities.
The claim is that whatever equity is added to the home over the years would be ours. (True?)
Thank You.
See if you can get another regular mortgage on your house.
Figure enough to pay off the CC debt and to survive on until your SS comes in- and to pay the payments on the new mortgage. Figure carefully.
Banks should offer “bridge” loans to people in your circumstance as there are many unemployed near SS age with assets (I’m one).
Check welfare office- heating help is pretty generous- and keep looking for work.
$134G over how long?
What are they paying you monthly?
They can’t be paying you in a lump sum or they would own & take the house.
But once they do reach the $134 (plus some interest I would assume), my understanding is that the payments cease, you move out and they are the new owners.
You are a young man-—you could live in reasonably good health for years! Where do you plan to live after they take possession of the house?
The money would be a lump sum and no, we wouldn’t have to move and would only have to repay the money when and if we were to move .. or die.
Selling your house might be an option too, but only if rents are much lower than your house payments. I know the rents in my area are more than our mortgage.
Pay your mortgage first. Every other bill is second to your mortgage. You can't just let the bank take 85,000 in equity from you. It's all your savings, and you will get a job someday.
Coupons, Coupons, Coupons. You will be surprised on the small amount money you can spend for food. Buy only sale items and use coupons.
I cut my grocery bill for a family of five from 150.00 to 50.00 when we went through a hard time. It wasn't what we wanted to eat, but no one went hungry.
Default on your credit card if necessary. Everything else should be paid first before your credit cards.
Good luck.
Thank You but the one thing that I failed to mention is .. We are not married.
The home is in her name only.
We have chosen this arraignment because you never know What the government is going to penalize you for being married.
I see EVO X has given you some good information about the usual age requirements and about reverse mtgs in general.
That age limit (62) possibility is worrisome. Pliny, you would have to have a GOOD lawyer look this thing over. If they are offering you the mortgage based only on your wife, you would have to steer clear of it, right?
These kinds of things are tricky anyway and in tough times like this the sharks are in the water. Proceed carefully. Try to work with your bank or another, perhaps smaller and more community-focused, bank. There is always the chance that your present lender (God forbid it’s one of the megabanks) will be willing to consider a work-out deal, where you pay them interest for a year or two or maybe a little principle and interest, etc.
You will have a hard time pulling more equity out of the house. You might do best to sell it for $200G and move to a nice part of the country (say Bozeman, Montana, or somewhere in Arizona) where condos and inexpensive homes are way overbuilt and on the chopping block.
All those decisions would be difficult and risky. But first and foremost you don’t want to give your house away to a shady operator.
Try to find a good conservative banker, or successful businessman you might know, or even a lawyer you trust a great deal. Maybe some of these guys on the board will help in that regard too.
Keep looking, keep asking. You can work your way out of this one I think.
Good luck.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.