rvupgradestore.com Composet Products Fridge Defend
RV Life Magazine RV Park Reviews RV Trip Wizard

Author Topic: Keeping up with the Jones's  (Read 2341 times)

Utclmjmpr

  • ---
  • Posts: 3382
Keeping up with the Jones's
« on: October 10, 2015, 03:57:20 PM »
 I have a friend that recently owed 60K payoff on his house, so took a reverse mortgage and realized a 9K payout back to him, could not stand the money in his pocket so bought a 2000 diesel pusher and payed 65K for an object that will depreciate and deteriorate faster than the house.. Now can't afford the fuel to use it so it sits in his driveway and rots.  It would be sad if it weren't so dumb.>>>Dan
« Last Edit: October 10, 2015, 04:03:29 PM by utahclaimjumper »
38' American Tradition 38TT/330 turbo Cummins
Jeep liberty 4 down
72 VW Baja 4 down
Cedar City, Utah
USAF vet. 59-63
The difference between intelligence & stupidity is: intelligence has it's limits
      Albert Einstein.

ArdraF

  • ---
  • Posts: 10154
Re: Keeping up with the Jones's
« Reply #1 on: October 10, 2015, 06:42:42 PM »
One reason I'm against reverse mortgages under most circumstances is that they're a very complicated financial instrument and there are many fine print pitfalls which most people don't understand or even know about.  I read about one person who went on a lengthy trip and returned to find his home taken by the bank that considered it vacant and/or unoccupied because no one was there.  So maybe it's just as well your friend can't afford to travel.  Imagine coming home to a house that has for all intents and purposes been repossessed!

Here's what Investopedia says about it.  "Some [reverse mortgages] outline how many days or months the property can sit vacant before the lender can call the loan. For example, if you have a heart attack and spend three months in hospital and residential rehabilitation, the lender may be able to call the loan and foreclose on the house because it is unoccupied. The same is true if you have to go into an assisted living facility. The reverse mortgage must be repaid or the house must be sold."

ArdraF
ArdraF
:D :D

Utclmjmpr

  • ---
  • Posts: 3382
Re: Keeping up with the Jones's
« Reply #2 on: October 10, 2015, 07:05:34 PM »
  Another aspect most don't know is the seller has to pay a premium to insure the lender will sell at a predetermined profit in the future, all expenses incurred to formulate the "loan" comes from the sellers equity, thus the 9K payout for him at the end of the deal.>>>Dan
38' American Tradition 38TT/330 turbo Cummins
Jeep liberty 4 down
72 VW Baja 4 down
Cedar City, Utah
USAF vet. 59-63
The difference between intelligence & stupidity is: intelligence has it's limits
      Albert Einstein.

Utclmjmpr

  • ---
  • Posts: 3382
Re: Keeping up with the Jones's
« Reply #3 on: October 10, 2015, 09:14:43 PM »
  To keep the thread on topic, this individual had a beater 5th wheel that he let his grandkids tear up and it became worthless, then his circle began to buy diesel pushers and he HAD to have one. Now the grandkids are destroying this to.>>>D
38' American Tradition 38TT/330 turbo Cummins
Jeep liberty 4 down
72 VW Baja 4 down
Cedar City, Utah
USAF vet. 59-63
The difference between intelligence & stupidity is: intelligence has it's limits
      Albert Einstein.

MN Blue Skies

  • ---
  • Posts: 1252
  • Favorite saying: "It depends."
Re: Keeping up with the Jones's
« Reply #4 on: October 10, 2015, 09:44:50 PM »
  Another aspect most don't know is the seller has to pay a premium to insure the lender will sell at a predetermined profit in the future, all expenses incurred to formulate the "loan" comes from the sellers equity, thus the 9K payout for him at the end of the deal.>>>Dan

Dan, what is the source of your information?  Although a reserve mortgage can be used to purchase a home, most reverse mortgages are used to refinance a home and in those situations there is no "seller."  You mentioned a "premium."  Did your friend get a HECM (Home Equity Conversion Mortgage.)  In that case it was an FHA-insured mortgage and the "premium" is used to insurance the mortgage.   
« Last Edit: October 10, 2015, 09:47:12 PM by MN Blue Skies »
A girl called Max, her husband Eric, Princess Kitty, and Molly the Service Dog in training.

2013 Cougar High Country 315 RES ( A 35' 5th Wheel)
"Big Blue" 2012 RAM 3500 Big Horn (Cummins Diesel 1 ton)

MN Blue Skies

  • ---
  • Posts: 1252
  • Favorite saying: "It depends."
Re: Keeping up with the Jones's
« Reply #5 on: October 10, 2015, 09:53:21 PM »
Dan, If I understand you correctly the topic is not about Reverse Mortgages but is about the poor choices and financial decisions people make in order to "keep up with the Jones's"  Is that correct?
A girl called Max, her husband Eric, Princess Kitty, and Molly the Service Dog in training.

2013 Cougar High Country 315 RES ( A 35' 5th Wheel)
"Big Blue" 2012 RAM 3500 Big Horn (Cummins Diesel 1 ton)

JackL

  • ---
  • Posts: 686
Re: Keeping up with the Jones's
« Reply #6 on: October 11, 2015, 04:50:27 AM »
  To keep the thread on topic, this individual had a beater 5th wheel that he let his grandkids tear up and it became worthless, then his circle began to buy diesel pushers and he HAD to have one. Now the grandkids are destroying this to.>>>D

 Are you sure he is your friend ?????

Jack L

Utclmjmpr

  • ---
  • Posts: 3382
Re: Keeping up with the Jones's
« Reply #7 on: October 11, 2015, 03:27:13 PM »
  As Ardra says the devil is in the fine print, with a REVERSE mortgage there is a "lender" and a "seller" like any other mortgage. In this case (and this particular contract) an insurance clause protects the "lender/buyer" against any future lose of profit, guess who pays for the insurance?  I have known this person for 11 years, I can't understand his thinking (or lack of) and he's always broke.>>>D
38' American Tradition 38TT/330 turbo Cummins
Jeep liberty 4 down
72 VW Baja 4 down
Cedar City, Utah
USAF vet. 59-63
The difference between intelligence & stupidity is: intelligence has it's limits
      Albert Einstein.

MN Blue Skies

  • ---
  • Posts: 1252
  • Favorite saying: "It depends."
Re: Keeping up with the Jones's
« Reply #8 on: October 11, 2015, 09:00:19 PM »
Dan, I would like to clarify some mortgage terminology.  A Mortgagor (Borrower) gets a mortgage from a Mortgagee (Lender).  The Borrower does not sell his/her property to the Lender and therefore is not the "seller".  Instead the Borrower signs a mortgage and a note.  The mortgage is filed as a lien against the property.

As Ardra says the devil is in the fine print

I agree that the devil is in the fine print especially with a reverse mortgage.  Reverse mortgages are very complicated and even very experienced Mortgage Loan Officers are not familiar with all the criteria.  Most reverse mortgages now require counseling from an approved Housing Counselor.

Are all reverse mortgages bad?  In my opinion I would say that a reverse mortgage is usually not a good option for most seniors.  HOWEVER, I have been involved with reverse mortgage transactions that allowed low income senior homeowners to remain in their homes. 

(BTW: I spent 35+ rewarding years as a Community Reinvestment Act Mortgage Loan Officer, Financial Literacy and Credit Counselor, Reverse Mortgage Counselor, and the Manager of a large HUD-approved Housing Counseling Agency.)

On the surface I do not agree with your "friend's" use of the RM funds to purchase a DP however we don't have all the details. 

A girl called Max, her husband Eric, Princess Kitty, and Molly the Service Dog in training.

2013 Cougar High Country 315 RES ( A 35' 5th Wheel)
"Big Blue" 2012 RAM 3500 Big Horn (Cummins Diesel 1 ton)

PatrioticStabilist

  • Guest
Re: Keeping up with the Jones's
« Reply #9 on: October 12, 2015, 09:17:58 PM »
Doesn't sound like a wise choice, but he won't be the first or the last.  I just can't understand some folks.