Profile picture for teesmelser

82 year old wants to borrow $60,000 on home, with $0.00 mortgage. Fixed income 28k annual. Advice?

Credit Card and carpayment = 500.00. Would be paid off with loan.
  • October 20 2009 - Colorado Springs
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Answers (7)

Best Answer

Teesmelser,
I concur with Mr. Shapiro.  A reverse mortgage might be in this senior's best interest.  I would highly recommend contacting a local Reverse specialist in your area to sit down and talk with.  The main concern will be the value of the home.  There are no income or credit requirements for a reverse mortgage therefore, if there is enough value/equity in the home, he/she will not have any problem obtaining the loan.  With a reverse mortgage there arent any monthly payments.  The note is due when the home is no longer the senior's primary residence or upon their passing.  There is a 12 month window for the senior or family to decide what they would like to do whether it be sell the home or finance to debt to keep the home in the family. 
  • October 20 2009
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Agree with the reverse mortgage recommendation.  Its a great product.

I would, however, be careful with this route  "they should have an attorney contact the credit card companies to negotiate a lower payoff."

If this is done, this income could be 1099 income to the borrower and they might wind up owing taxes on this write off.  They aren't making any payments on the house with the reverse mortgage, so just pay it.

 
  • October 20 2009
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Profile picture for shapiroamg
Good stuff Chris. Forgot to mention in my earlier post that a $60k fixed rate mortgage will have a payment in the upper $400 range. So replacing a $500 min credit card payment with a close to $500 mortgage payment is doing no  benefit to the homeowner. If they are having trouble with a credit card payment that is one thing. Havingt trouble with a mortgage and they could loose thier house. A reverse mortgage has no payment and thus could increase this person's cash flow by $500 (the amount of the credit card payments).
  • October 20 2009
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Profile picture for shapiroamg
How does a reverse put all the cards in the bank's hands? Reverse is a lein like any other mortgage (fannie freddie fha va).

If you are talking about putting the house in trust or something of the sort, no conventional loan/lender will allow that. They would want the house in the individual's name. Reverse will allow for the property to be held in a Living Trust or a revocable trust.

Here is a better idea: No matter what this homeowner might get for a mortgage, they should have an attorney contact the credit card companies to negotiate a lower payoff.
  • October 20 2009
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What state? In Colorado, there is no homestead protection (well actually there is, but it is only $24,000). If she is going to mortgage the house, she should "structure" the transaction to maximize profitability, inheritance and minimize tax consequences and liability. I can offer some help in this regard by directing her to a good attorney. The reverse mortgages are also ok, but they tend to put all of the cards in the bank's hands. Legally, this is a poor strategy for long-term success.

  • October 20 2009
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Profile picture for shapiroamg
Reverse could make sense if the person is planning to stay in the property for long term...
  • October 20 2009
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As long as the person has the income to qualify: acceptable front and back DTI, then he cannot be denied the loan.  To do so based on his age would be discrimination.
Also, the LTV has to be acceptable, not over 80%.
  • October 20 2009
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