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????? FINANCIAL QUESTION ?????

Discussion in 'Uncategorized Threads' started by scarecrow, Mar 3, 2007.

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  1. scarecrow

    scarecrow TS Member

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    I know some of you reading this web page are financial experts so I really need help. My friends Dick & Wanda need some advice. Wanda has MS and her health care costs are rising. In addition to owning the home they live in they also own (free & clear) a resort home. Their daughter is living in the resort home and I'm sure they will not sell the resort home as she would have no place to live. What would be the best way to access - asset monies ? I've heard about reverse mortages. Could this be an option ? Any input would be greatly appreciated. Thanks J.R. Long
     
  2. Tripod

    Tripod Well-Known Member

    Joined:
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    Iowa man!!
    I would look long and hard before I went to reverse mortgage. In my opinion they prey on people who have limited options.
     
  3. dmarbell

    dmarbell Active Member

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    Take a look at the above web site. Also read the AARP web site regarding reverse mortgages.

    Tripod, when someone has heeded the age-old advice to pay off their mortgage, and now they are retired and house-poor, I don't think offering them a HUD-backed loan that never has to be repaid is preying on them. The costs are a little on the high side fee-wise, but part of the fee is an insurance premium that guarantees the loan repayment, so the homeowner never has to worry about repaying the loan.

    Tripod and Devil'sAdvocate,

    I have 27 years of financial experience, was trained initially by two of the largest accounting firms in the world, and have spent tons of money out of my own pocket on training, and on investigating every financial conspiracy theory that exists. When I give an opinion on this site, it is only for the egotistical purpose of making sure people see financial things in the same light as I do, given all my experience and training. I'm not "right" or "wrong", just have an opinion on things. If you sat in my office for my opinion, you'd pay dearly, and you'd get the same advice only in a little more detail.

    Danny
     
  4. dmarbell

    dmarbell Active Member

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    Alf,

    That's true enough. That's why I post the web site link above when talking about reverse mortgages or other mortgages.

    Danny
     
  5. dmarbell

    dmarbell Active Member

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    Alf,

    Normally that would be good advice. In certain circumstances, like the one that started this thread, that might not work. Just bear with me.

    Let's say Dick and Wanda are house-poor because of their medical situation. They heed your good advice and select a fee-based planner in their area. The advisor looks over their financial situation and finds that the equity in their properties are their only assets. Those assets are not liquid.

    The planner gives them 3 alternatives, there could be more.

    1) Sell one or more properties and use the cash for living and medical expenses.

    2) Borrow against the properties and use the cash as above. This would require income qualification and monthly payments.

    3) Get a reverse mortgage and use the cash. This only works on their primary residence, and requires no qualification or repayment. The amount they get is limited.

    Let's just say in this case they decide on option 3, the reverse mortgage. They are now out whatever the fee was that the planner charged. In my example, the fee is critical because these people need cash badly enough to consider selling properties that they really don't want to sell.

    Or, they could use referrals, or even the internet, to find a competent person who offers reverse mortgages but who also has some good credentials and can do some valid analysis, maybe not a full blown financial plan, and offer the same alternatives. If that competent person is me, and they decide to do the reverse mortgage, I get paid a whopping 0.50% on the pledged value of their house.

    If they have other assets and are just seeking advice on the best way to access the equity, then yes they should pay for solid, fee-based advice.

    Keep in mind that every planner has an agenda. Mortgage planners want to sell mortgages, life insurance planners want to sell life insurance, annuity planners want to sell annuities, fee-based planners want to sell fees and wrap accounts, brokers want to sell portfolios and wrap accounts, CPAs and attorneys want to sell fees. The selling of fees is no less of a pre-planned agenda than the selling of mortgages.

    Sorry, Alf, once I got started I couldn't stop.

    I got into the reverse mortgage (RM) business because I was referring people to a bank in my state that does most of the reverse mortgages here. I met with the people, explained RMs and how they work, attended the mandatory face-to-face counseling session, attended the meeting with the bank, and attended the closing, if necessary. These people were broke and house-poor, and the bank made it's fees. I did all this pro bono, and didn't get anything. Now I can do the same thing, help those who need this help, and get paid for my efforts.

    One lady I help pro bono lived in a $100,000 house and lived on $600 in social security, plus some assistance. I would not have felt bad about getting paid $500 for helping her out. As it is, the bank got that money anyway.

    Sundance,

    If you're reading this, go to my web site, look at my credentials, fill out the request, and I'll help you out or refer you to someone near your location who can.

    Daniel A. Marbell, Jr.
    CPA, CFP
     
  6. scarecrow

    scarecrow TS Member

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    To all that have responded. Thank you for you input. I was looking at where to start and would seek professional advice before any action was taken. I truely appreciate all of the comments. Dick & Wanda are older and they are not aware of their options. I know every case is unique and all avenues will be explorered before anything is done. Thanks again and if anyone else has suggestions please put them on the thread. J.R. Long
     
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