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Juanita Said:

What is procedure on Reverse Mortgages if property taxes aren't paid?

We Answered:

What state are you in? That would help. Some states have deferral programs like OR: http://www.oregon.gov/DOR/SCD/seniordef.…

You probably are not in CA since they have Prop 13 which keeps property tax at 1% at the value they bought it at (plus a yearly factor).

In any case, your mother should have had this disclosed before she bought it. I think she should have recourse against whomever sold it to her.

But to answer your question, you need to let us know what state.

Marcia Said:

Why does it seem "reverse mortgages" are becoming more popular?

We Answered:

Because people are getting more desperate/dumb/silly.

To me this fit beside those interest-only loans! Anyway, your question is why now? I believe the real answer is that seniors feel entitled to a retirement. Not sure where that idea came from since my grandparents worked until they died, but hey, you can see why people like the concept.

So, everybody does it. Yet, studies show only 10-20% are financially prepared. Reversed mortgage to the rescue. You can expect to see many more new ideas like this come up in future years as the world continues its downward spiral towards entitlement and away from individual responsibility.

The consumer benefits in that you get a monthly check for the price of your home (generally it is based on how much you would pay for the home if you were buying it). You get to live in the house while getting a check.

So where is the catch? The bank owns the whole value of the house upon death. If you die younger than average, the bank wins big time. If you live past the average, the bank actually could start to lose on the deal.

But consider that banks have all the averages figured out and you would have to live way past average to make the bank overpay you. Of course, the bank has the advantage of the fact that home prices generally rise at a nice clip...yet the reverse mortgage was agreed upon in today's dollars. If the housing market grows by 4%, the bank is ahead financially even if you do make it past the average life expectency.

Don't get me wrong, you do get a cash flow. But who else is involved in this deal? The family. Many people die and the only inheritance was the house. Well, even that won't happen any more. It's all about me, me, me.

Sad, but true.

Patricia Said:

What is the downside of reverse mortgages?

We Answered:

This product has become ever more popular with the aging society. Because of this these loans are changing almost daily. The downside to this type of loan is your house is appreciating after you lock in the payment rate. So in essense you have two things working against you the bank interest on the money they are giving you and the appreciation of the market. Also be wary of the fee's and transferability. If your in-laws were to die, in some cases the bank can make a lump payment to the beneficiary and take the house. In other cases you can pay them back at the sale of the house and take the difference. They are somewhat complicated circumstances and you need to look over all the contract details so you have all the right information.

Theodore Said:

What effect has the Home Mortgage Crisis had on "Reverse Mortgages"?

We Answered:

For individuals who have already obtained a reverse mortgage, the overall mortgage situation will have no affect on their current reverse mortgage loan or cash benefits. However, if the individual was attempting to sell the home or refinance the reverse mortgage loan, then the current value of the home would drive the selling price or the new loan value.

Allan Said:

What do you think of reverse mortgages?

We Answered:

Don't do it, I could go into a long list of reasons why but I just don't have time right now. But for starters it's going to cost a lot points up front and they'll use their own bank appraisers which will low ball you and you better have quite a bit equity in the house or it's no go. As far as the payout, it could be monthly payments or a lump sum or a combination of the two. Of course you will have to take special classes before the loan process even starts to make sure you understand why the lender is shoving it to you. The best thing you can do is to take the proposal to an attorney that you select and have him explain everything to you for a small fee. The best of luck to you.

Maurice Said:

I am stuck between deciding what to focus on more, Reverse Mortgages or leveraging my equity?

We Answered:

not much to go on....for what purpose.....how much are we talking.....what are all of the other pieces of your financial life? If you want/need an "unbiased" opinion, I would consult with Jonathanpond.com's smart planner or suzeorman.com for help, otherwise seek a couple of recommended financial planners in your area and only act if you get 2 things, confirmation of 2 or more with the same answers from successful track records, and what your gut tells you