Foreclosures--only in Florida, I hope

Quote:

---

Originally Posted by TruckerMe

Ok. So lets say the unthinkable happens and a meteor lands on Lacarnut next week. Nuthin' left but your tennis shoes.

The bank gets the house, right? But you've only had use of the money for a couple of months. Does the bank sell the house, settle the account and pass on the excess profits to the heirs? Or do they keep it all?

And what if you live another 50 years (Post number 150,000, 654)? Seems like there would be so much interest accrued on the loan that there is no way the bank is going to come out positive. Plus, the house and the neighborhood have gone to hell. What then?

---

If I get squashed to a pulp, my brother get the cash from the reverse mortgage, collects my homeowners insurance, pays off the mortgage company and pockets the balance. The bank never owns the house in this instance. You can always sell it but you can not rent it. It has to be your main residence.

Let's say I live another 30 years. You are correct that the interest would accrue much faster than the appreciation of the house. In that case, the bank would probably be upside down on the mortgage. So, my brother would give the house back to the mortgage company without any stain on his credit. The bank charges a 1.25 % fee added on to the mortgage rate to protect themselves of that occurrence. In other words, the bank buys protection. The bank will not come out on the short end of the stick.

There are a bunch of myths and misconceptions about a reverse mortgage. In the last couple of years, the rules and regulations have been tightened up.