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Member |
I sense some family member blue collar crime in some of these. Older ppl don't pay all the taxes on homes. They get exempted on most if not all. But I also know that is easy to go through 100k in just a few years when there is little to no other income. SSI medical goes up for the years income exceeds certain amounts. Sometimes more than double. @ 300k+ Medicare insurance goes up 500 a month for that year. So....some serious inquires and planning must be done before singing on the dotted line. | |||
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| Member |
If you own the home outright, you can take out a regular mortgage and use part of the proceeds to make the payments, with the balance to spend as needed. Either way, you still need to make insurance and tax payments, which seems to be what trips up most reverse mortgage holders. You don't get to stay in the home for free. | |||
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Member |
I'll give you two timeshares for one reverse mortgage. You can't truly call yourself "peaceful" unless you are capable of great violence. If you're not capable of great violence, you're not peaceful, you're harmless. NRA Benefactor/Patriot Member | |||
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Truth Wins |
I appreciate Dave Ramsey and his advice. But understand, he has a schtick. And that's to sell financial advice. Ramsey's ability to live his own advice is, in no small part, because he's rich from selling books. His advice may be sound, but some of it is simply impractical to anyone without substantial means. _____________ "I enter a swamp as a sacred place—a sanctum sanctorum. There is the strength—the marrow of Nature." - Henry David Thoreau | |||
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| Member |
I agree that Ramsey is in the business of selling advice. I also know that you can get all his advice that matters for free. His system for lack of a better word works. Period. It doesn’t require substantial means. The fact that you think that indicates to me that you might not have actually tried his system. What it does require is discipline. Making choices that suck instead of choices that feel good. I don’t know if it’s a scam. What I do know is that reverse mortgages are basically never the smartest choice. They are the seemingly easy choice. We can argue about the word scam but you really should look into the other options before choosing this one. Semantics. | |||
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| Truth Wins |
I don't need to try his system if the one I have been using works. I'll out just two areas there Dave has it wrong. 1) Credit cards. Dave says "credit cards bad, no credit cards good." Nonsense. Using a credit card responsibly is necessary to establishing a significantly high credit score. Having cards and not using them, or not having cards at all, or having cards and cancelling the cards and maintaining none, can actually be detrimental to a credit score. Dave has it wrong here. 2) Not investing until you are out of debt. Again, nonsense. High debt or unmanageable debt is always bad. But reasonable debt that is being paid also helps with credit scores. Paying debt actually increases a credit score higher than not having any debt, since it is an indicator of credit worthiness. And refusing to invest, especially in retirement, until all debt has been paid off is simply silly. "Paying yourself first" is an axiom that holds true to this day. When I say Dave Ramsey's advice works best for people with means, I generally mean people that have the ability to live independent of credit and credit scores. _____________ "I enter a swamp as a sacred place—a sanctum sanctorum. There is the strength—the marrow of Nature." - Henry David Thoreau | |||
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| Team Apathy |
I used to listen to Dave a fair amount, abd his system helped us pay off all debt other than the house... but from what I remember the views you express depend wholly on the basis that one believes a credit score matters. From what I recall he is of the opinion your credit score doesn’t matter. If you operate under that premise than his views make more sense. I like a lot of what he says and we maintain one CC ONLY for hotels. I travel for work a few times a year and I only use it to put on file with the hotel fir incidentals (of which there never are any). I learned long ago me and credit cards don’t mix well so I don’t play with fire. But I totally understand that those disciplined enough can really benefit from them, and that’s cool for them. So, like others have said, I’m with Dave, most of the time. The big area I have trouble with is buying a house after having not cared about your credit score for a substantial period of time. How many of us can pay cash for a home? That’s not real viable. | |||
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Member |
Only if you have the income to make the mortgage payments. My folks have enough in the bank to pay for anything, but their INCOME is next to nothing. It's SS and some small pensions. They cannot qualify for any kind of conventional mortgage to refi their house. They don't need to, as their money earns more in the market than the interest on their mortgage runs, and they can easily pay it all off tomorrow, if they wanted to. But mortgages go by debt to income ratios, not how much money you have in the bank. If you have a mortgage-free house worth $1 million and your only income is $1200/month in SS, good luck getting a mortgage to refi, cash-out, home equity line, etc. | |||
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| Savor the limelight |
The first part it true, but the second isn't. At least it wasn't when I moved here in 2000 and it certainly could be different today. I called around for a mortgage when I moved here and people laughed when I said I didn't have a job. I applied for and was approved at two places. Both loans where conventional, conforming, and on the low side of interest rates for a 15 year fixed rate at the time. At the bank I went with, the woman in charge of loan origination walked into the conference room laughing. She told me that my 70% debt to income ratio was the highest they had ever approved for a mortgage. The previous record at 48% was held by a doctor making serious money annually. My mortgage was only approved because I had assets. When I asked if the bank was going to keep my mortgage, she told me they would be selling it. | |||
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Membership has its privileges |
Like many, I listen to and agree with much of what Dave preaches, but certainly not all of it. However, everyone's situation is a little different. Regarding reverse mortgages, it is certainly not the right vehicle for my wife and I, at least not right now. Niech Zyje P-220 Steve | |||
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| Member |
There are programs out there for such a situation, but it's certainly not a Fannie/Freddie loan product. If you have no job, and/or your income is $0, then there's no way to figure a debt/income ratio for you. I think my grandmother got some kind of loan from Merrill Lynch, using her account with them as collateral, but her only income then was SS and a small pension, certainly not enough to qualify for the house she bought, though she could have paid cash for it. | |||
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| Needs a check up from the neck up  |
I know a lot of you like Ramsey but he is wrong on this one. As a title attorney I have closed hundreds if not a thousand reverse mortgages. The reality is those who have cash in their home but little to no income can't get any other type of financing. So saying a 30 year fixed has lower fees and lower rates than a RM is a fallacy, because the 30 year fixed is not an option at all for most senior borrowers. Also note that his scenario used in this situation is a 2008 loan. Prior to 2015 there was no assessment into the borrowers ability to pay the taxes and insurance. Now that is a consideration, yes the old product should have made those considerations but they didn't, now they do. I can't tell you how many times I have sat in homes of 75 year olds with a $500,000 home they own outright and don't have a pot to piss in for income. I have seen these people eating cat food, no ac turned on (in south Florida) because they are afraid of the light bill, broken appliances for years, hanging out their laundry to dry because the dryer is broken. You really can't imagine how many people live like this. When they need a new roof, or dryer, or tires on the car, they have to ask their kids for money. Kids who 99% of the time don't want the house, they want mom and dad to be happy and comfortable. Lots of Kids in their 40's and 50's come begging for this because they can't support mom and dad and their families at the same time. Some seniors who are well off use it to fund gifts during their lives. Pay college tuition for grandkids, take the whole family on a cruise while they still can. I do want to address the premise of this video which is that property charges lead people into default in these products. Essentially he is saying that people who failed to pay taxes and insurance end up in trouble with the lender. Well no shit. When you are talking about default you are talking about the end of the loan. His video referenced a 2008 loan for a person that is now 92. So 11 years ago, she took this loan out. At 81 did she have enough income to support a 30 year loan at 81, hell no. Did her taxes and insurance costs change in those 11 years? Those were flat costs to live in that home. Now she faces foreclosure because she can't pay them. But for 11 years she did pay them AND SHE LIVED IN HER OWN HOME FOR 11 YEARS!!! What other funds did she use in that time period? What happened to home values in that time period (2008 really market crash anyone)? So she is going to lose her home now, yes, but if she didn't do a reverse mortgage she would have lost her home 11 years ago. Does the tax man not lien your house in Dave's world because you were emotionally strong enough to resist Tom Selleck and his reverse mortgage? Is a reverse mortgage for everyone no! But these are cherry picked facts presented in a very skewed manner. __________________________ The entire reason for the Second Amendment is not for hunting, it’s not for target shooting … it’s there so that you and I can protect our homes and our children and and our families and our lives. And it’s also there as fundamental check on government tyranny. Sen Ted Cruz | |||
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At Jacob's Well |
Sell the $500,000 house and buy a $200,000 house. No reverse mortgage needed, and the taxes and insurance are more affordable. The reverse mortgage enables you to maintain a standard of living that you can no longer afford, with the huge penalty of zero assets at the end. J Rak Chazak Amats | |||
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| Member |
How many people, for whom a reverse mortgage is even a consideration, do you know who can deal with that? Selling a house, finding another one and moving, probably greatly downsizing, is not a trivial matter and especially for someone north of 75 years old. If you don't have family nearby to help with it, it's a nightmare. And those are the very folks for whom a reverse mortgage might be a good option. It ain't for everyone. But it is good for some folks. | |||
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| Savor the limelight |
Insurance most likely more affordable, but taxes it would depend. Increases of taxable values on primary residences in Florida are artificially capped. You could have a person who has lived in their home for 25 years paying less in property tax on a home with a market value of $500,000 paying based on a taxable value of $200,000. The neighbor next door with the same house purchase last year would pay based on the $500,000. | |||
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| Needs a check up from the neck up |
just addressing the sale proposition you offered, there are few places here in palm beach county where you can sell a home for $500 and buy another one for $200 and maintain location/social/church/synagogue/friends/safety Its not an area that lends itself to a quick downsize. Yes you can do it, but it often comes at a steep price in the day to day living. Neighborhoods are often HOA's and the person may have a total social structure based around that HOA, there is no selling and buying lower and staying with those folks. These are people who have seen enough friends die that they are not ready to just up and change them and move to a sketchy part of town when the RM allows them to maintain everything status quo for 10-15 years. __________________________ The entire reason for the Second Amendment is not for hunting, it’s not for target shooting … it’s there so that you and I can protect our homes and our children and and our families and our lives. And it’s also there as fundamental check on government tyranny. Sen Ted Cruz | |||
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| Member |
I also wondered about Dave's aversion to credit cards. Then I realized that for the most part he is talking to people who have gotten into credit card trouble. For them, having a credit card is like an alcoholic keeping a bottle of Vodka in the house. We have three cards: one gets me .10 per gallon off at the gas station. I'll have that card as long as the discount lasts. One card is for the Internet, primarily Amazon. That card has been hacked three times over the years, so closing it and getting a new number is easy. The third one is for travel - motels, rental cars, etc. All three get paid in full every month. Dave says "If you live like no one else, some day you can live like no one else". I had a skilled trade, retired at 55 debt free and today we live better than either one of us ever expected. Oh, and we never spent a dime on anything Dave sells. | |||
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| Big Stack |
I was going to post a shorter version of this. This issue is only going to get worse as more people retire (by choice or not), without the means to sustain their income in retirement. At some point it's going to get really ugly.
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Member |
Twenty years ago I purchased my first rental property with nearly no money down. Two decades later, my various rentals provide an extra $4,000 or so extra income a month, and are currently going up in value nearly $100,000 a year. Dave Ramsey would not approve of my method. Much of his advice is sound. It’s mostly recycled ideas from George Clason’s book The Richest Man in Babylon, modernized and repackaged for resale as Dave’s program. Ramsey’s advice about frugality is spot on. His advice about avoiding leveraged capital and credit is completely wrong. If I were following his advice completely, I’d still be saving up for my first rental, and today everything would be appreciating faster than I could save. Take the fundamentals that Dave preaches as worthy advice, but don’t blindly assume he has all the answers. His book is a resource, not a bible. Demand not that events should happen as you wish; but wish them to happen as they do happen, and you will go on well. -Epictetus | |||
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thin skin can't win |
Holy thread necrophilia! You only have integrity once. - imprezaguy02 | |||
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