These things ought to be illegal. My mom had one and I didn't know too much about it, till after her death. Their game is to over appraise the value of the home, then they can loan 85% of the loan value, plus all kind of fees and interest and charges. My mom drew 11,100.00 in monthly payments and got 7000.00 up front and when she passed away 37 months into the mortage, it cost us 33000.00 to get even and keep the house. They made 15k in 3 yrs. off a 18k investment. I wish I could make my money grow like that.
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Why would anyone do one of these things?
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It is kind of like a pawn shop but for a home.Originally posted by Mike D View Post
You need money now and we will give it to you but at a higher rate of interest that the banks can legally charge. We are depending on your sometimes dire situation. So you get the money that you need now and we will make a bunch off of you later.
If you lose a $400 rifle that you pawned for $100 when you are struggling it really isn't that much of a lose except maybe the sentimental value of a piece of property. Losing a home to the same kind of deal is a whole 'nother animal.
For some people though, especially those with no heirs or ones that don't need the money, it might be a somewhat decent deal. I have a coworker whose parents are doing that right now. They don't expect to get anything back from it. Their home was paid for long ago and they made enough money off of the reverse mortgage to keep them going along with their retirement until the end of their days. Sure, they could have sold it for more on the open market but then they would have had to find another place to live. They aren't using it as a chunk of cash to leave their kids that don't need it.
For them or someone in their situation, it might be worth it just to grab some cash up front and to live a comfortable life for those last few years. For anyone else......... ??Comment
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