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Post by pictureman on Mar 15, 2011 7:10:58 GMT -5
The time as come to sell the ol' homestead. It's a small house that needs some major reworking to the plumbing and electrical systems, a foundation jack-up, and a new roof, among a long list of minor fix-ups.
I could get a conventional loan/line of credit and make payments until it's sold, or go for a reverse mortgage and pay nothing until it's sold. I'm assuming that costs/points/fees would be about the same.
Bottom line: I estimate total repair bills of around 25-30 grand which should result in an easy sale of about $80,000.
As is, I could sell only the dirt; a buyer would tear it down and rebuild.
What would you do?
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Post by Warkitty on Mar 15, 2011 7:29:02 GMT -5
I think you would have to read the reverse mortgage contract pretty close before going that route.
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Deleted
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Post by Deleted on Mar 15, 2011 7:35:19 GMT -5
What WK said.
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Post by pictureman on Mar 15, 2011 8:18:23 GMT -5
Well, I sent off for some information from Fred Thompson, who wouldn't lie to us. I mean, he's been on teevee, run for President, and everything.
The agreements are pretty much the same. Get an appraisal, lender uses a standard formula to determine how much one can get, then all costs are included in the package, so no cash is due up front (as I read it). Nothing is paid until the original homeowner/borrower "leaves" the home (dead or alive), at which time all the money is due. Choices (of the heirs) are sell the house to pay off mortage, keeping the difference, or float a conventional loan to pay it back. Because of the way this works the costs tend to be a little high.
(Yoda: love today's photo; had no idea Pres. Bush had attended one of Gary Poole's Hallowe'en parties!)
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Post by Justin Thyme on Mar 15, 2011 9:02:43 GMT -5
My understanding is that fees and other such costs on reverse mortgages are abnormally high.
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Post by Warkitty on Mar 15, 2011 9:15:19 GMT -5
Call Clark Howard
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harsh
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Post by harsh on Mar 15, 2011 10:06:10 GMT -5
Bad time to try and sell a house unless you are forced to, I would wait to do anything.
A reverses mortgage is most likely a bad idea.
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Post by daworm on Mar 15, 2011 10:36:13 GMT -5
From all I've heard, they are good only as a last resort. That said, if you need that last resort, its good that they are there. It's kind of like cashing out your 401K. Its a bad idea, but if you don't have anything else, and can't get anything else, you might just have to do it. But if you don't have to, don't.
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Deleted
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Post by Deleted on Mar 15, 2011 12:38:29 GMT -5
Well-said, Worm.
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Post by pictureman on Mar 16, 2011 4:41:55 GMT -5
"Last resort" is a good thought. I often wonder about this when the ad says to get yourself one of them mortgages to take a cruise or something. Either you're spending a lot in cost/fees to get a little cash for a trip, or that's one very expensive cruise.
Here's why I'm even considering this path: qualifying for a conventional mortgage (much more difficult these days) plus the debt service on a $25K+ loan.
Clark Howard = Great Idea! I'll check out his web site this morning and let you know what I learn.
Thanks for some great input!
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