Reverse Mortgage- pros/cons

[95DRGT]

My dad is hell bent on doing this and I'm wanting to make sure he is not getting taken.

Any pro's or con's to this?

[The King]

I would have no qualms about doing that myself if they are still available when I want one.

[Vertnut]

I'd get with SVT Lurch here on the board. He's very knowledgeable when it comes to mortgages. I'm sure he'd have some insight.

[SVT Lurch]

Pros:
-Positive Cashflow
-Don't have to sell the house at the end (saves estate headaches)

Cons:
-Underwriting is a bigger pain than a normal loan
-Fewer lenders offer them (we do not)
-More dishonest people in my experience (I have no one to refer)
-Original documents are required
-Take a long time to process
-In most cases it's cheaper to do a normal "cash out" refinance and just use the cash pulled out to make the payments since you can typically make >4% ROI and you can get a 30 year fixed for less than that (assuming 740+ FICO)

Having said all that, I've never done one. We have a few processors who used to process them and a loan officer that originated them, but that is their experience. We are still on a list the says we do them so we get calls from time to time inquiring about them. I asked our old account reps for lenders to refer and they told me they didn't have anyone they trusted enough to give me their name.

[95DRGT]

SVT Lurch- thanks for the info.

I did find someone local (Fort Worth)that does them (Premier Nationwide Lending in Fort Worth) whom was recommended via family friend.

My dad was trying to work with someone out of California that he found on a late night commercial. That was raising red flags.

Looks like the upfront costs of this thing are almost 10% of the payout-eek!

[AdamLX]

I know in the past the home owner had to attend a class or face to face counseling on what they were doing as well, mainly due to the average person doing this being a senior citizen.

Most people resort to it as a last ditch effort for their situation.

[SVT Lurch]

SVT Lurch- thanks for the info.

I did find someone local (Fort Worth)that does them (Premier Nationwide Lending in Fort Worth) whom was recommended via family friend.

My dad was trying to work with someone out of California that he found on a late night commercial. That was raising red flags.

Looks like the upfront costs of this thing are almost 10% of the payout-eek!

The family friend is the way to go - do NOT use an out of state lender.

I would ask Premier about a conventional cash out. In Texas that cost is limited to 3% of the loan amount.

[The King]

I know in the past the home owner had to attend a class or face to face counseling on what they were doing as well, mainly due to the average person doing this being a senior citizen.

Most people resort to it as a last ditch effort for their situation.

In my own case I would go this route preferably as a means of using the cash without having to invest it and make continuing payments. Granted they're not for everybody and the opportunity for deceptive lending is there, but if one does their homework (as they should on any loan) they can be useful.