New to the forum - Posted by Daniel_Fl

Posted by John Corey on May 02, 2006 at 10:33:17:

Ed,

I was hoping someone had some solid info on reverse mortgages. I only know of the concept hence my warning that I was not able to answer the question. Thanks for the link as this will be something worth investigating.

John Corey

New to the forum - Posted by Daniel_Fl

Posted by Daniel_Fl on May 01, 2006 at 22:52:21:

Hopefully this might be the right forum…financing.
My parents are elderly with many financial and medical issues. Today they
said they were considering a Reverse mortgage with Freedom Financial w/ the
1st appt. scheduled for 5/8/06.
My concern is they are somewhat gullible, loaded fees, variable rates, repairs
etc.
I have no interest in their property but may be able to help them in buying
and giving them their equity, to alleviate their stress. Any thoughts on where
to research reverse mortgages?
Rough Numbers:
1st loan $42,000
Value $70-90K

According to the R.M. calculators and them, they just get rid of their
mortgage payment.

Thanks John & Ed - Posted by Daniel_Fl

Posted by Daniel_Fl on May 02, 2006 at 10:58:02:

Thanks for your help, I will do more research.

Re: New to the forum - Posted by Ed Garcia

Posted by Ed Garcia on May 02, 2006 at 09:57:10:

Daniel,

John Corey has given you some sound advice but I don?t feel he has answered your question. Although I agree with John, and could come up with a few additional ideas.
I?m not sure it will influence or have an impact on your parents.

I think what you?re doing is coming here and asking about a reverse mortgage to educate yourself to either feel comfortable with your parents decision or guide them if you can obtain information that would be beneficial in their decision.

I?d like to send you to http://www.reverse.org/ where they should answer some of the questions that will be if concern to you and your parents. They also will send you to AARP at http://www.aarp.org/money/revmort/ for addition information.

You can surf these two sites and find the information you?re seeking,

Ed Garcia

Re: New to the forum - Posted by John Corey

Posted by John Corey on May 02, 2006 at 01:48:48:

Daniel,

Welcome.

Reverse mortgages have a place. As my knowledge on the subject is thin I will not comment further on the product.

On the broader subject of estate planning…

At some level your parents need to do some estate planning. How to cover their bills, what will happen if one or both need long term care, what should happen after 1 dies and then the other. The topic is more complicated than just getting some cash out our of the home.

As you somewhat indicated you could look to buy the place from them and then rent it back or let them stay for free. There are tax issues depending on how this is handled (gift or equity transfer to you is one issue; fair market rents if you want to claim the property as a rental is a second).

Two things really need to happen. First is an honest discussion as to what your parents would like to have happen if they get a vote. Some decisions will be forced upon them based on circumstances. Other decisions are only possible if you plan far enough in advance.

Second is a conversation with a competent estate planner (a lawyer who handles such matters). They will know the state and federal laws that apply. Depending on the state your parents live in you can collect referrals.

John Corey