Which is better - Line of credit or reverse mortgage?

raymond · Posted: Fri Jul 03, 2009 10:33 am Post subject:

>>she took about $25000 in cash and the rest stayed on a line of credit. who knows what happened, but she subsequently refinanced and suddenly owed about $185000.

I'd like to know more about the "who knows what happened" part of the story - she received an awful lot of money from the first Reverse Mortgage, and more cash from the other refinances. Why is she broke now, only a short time later? I'd ask more questions before pointing the finger at the Reverse Mortgage. There's more to this story then meets the eyes.

And, just as a FYI, the fees are a lot lower when a HECM is refinanced, because FHA's insurance is prorated.

I'm interested in knowing more about what happened to this homeowner and would like to talk with her.

Guest

My house is very old and because of the neighborhood it values at $48,000 is that too low for a reversed mortgage?

raymond · Posted: Fri Oct 09, 2009 11:51 am Post subject:

No, it's not too low. There isn't a minimum value with a FHA-insured Reverse Mortgage.

sunnyca2009 · Joined: 04 Aug 2009 Posts: 1735 35.94 Dollars($)

Thats really a good question, because lenders may not want to process a low mortage loan, becuase it cost them more money process than loan

raymond · Posted: Sat Oct 10, 2009 8:32 am Post subject:

With a traditional FHA-insured mortgage there aren't any minimums either. However, an "Investor" may say she won't buy the loan after it's originated unless it has a minimum value. That's called an "overlay". The only Investors for HECM's are Fannie Mae and Ginnie Mae, and there aren't any overlays.

I just completed originating a HECM in Mississippi and the home appraised for $30,000.00. It was a real old house and the homeowner grew up in it, and inheritied it from her folks when they passed.

Also, for reference, homeowners aren't allowed to pay for Processing or Underwriting with HECM's. The Originator must pay for those two fees out of her Origination Fee.

Guest

Told that if we do not refinance we will not be able to draw ant money and our monthly payment will increase because they will be billed for interest and principle any fees, past due amounts and unpaid charges accrued on our account.

Guest

told to refinance in order to be able to draw funds and/or our monthly bills will be higher.

Guest

My mother has a 44,400 line of credit, 35,500 home balance and I want to purchase my mother's home at this time. Home appraised for 100,000. What is it going to cost me? She has not withdrawn any money from the line of credit.

gmakerley · Posted: Sat Jan 23, 2010 10:30 am Post subject:

cm11049 i don't quite comprehend what you mean by "what is it going to cost me?"

do you mean what would closing costs be, etc? that's dependent, of course, on the type of loan you obtain. be careful where you go shopping for a loan, because the vast majority of lenders won't grant a loan for a small amount. your best bet might be a local credit union or a community bank that would keep rather than sell your loan.

Guest

When can you deduct these 2 on a reverse mortgage? 1. Mort. Ins. premium 2. Interest on funds you borrow from mortgage line of credit.

raymond · Posted: Mon Feb 22, 2010 8:20 am Post subject:

>>1. Mort. Ins. premium

No

>>2. Interest on funds you borrow from mortgage line of credit.

Yes, in the year the interest was actually paid to the Lender. With most Reverse Mortgages it's going to be the year the Reverse Mortgage is paid in full.

raymond · Posted: Mon Feb 22, 2010 8:23 am Post subject:

>>What is it going to cost me?

It'll be a regular purchase transaction and every Lender will be a little different, so you've got to shop around. You'll pay off the $35,500.00 to the Reverse Mortgage Lender, and Loan Fees.

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