H/O insurance and HUGE wildfire. Will it work ?

[Victor Newman]

Still trying to delay the inevitable QUIZ. Hope others in a similar, possible scenario.....will think about it and chime in. (Anything to mollify A.Jack)

 

[Zigner]

If you can't understand your policy, your best bet is going to be to either sit down in person with your agent and go over it line-by-line, or to do the same with an attorney specializing in insurance matters.

 

[Victor Newman]

adjusterjack......I have given up on this matter. Will let the chips fall as they may. Did, however, talk to a reverse mortgage lender. Interesting. We can take cash for 80% of our equity, now.... and stash it away. If the house is totally destroyed, the mortgage insurance premium that is included will cover the difference between our insurance company payout....and the actual rebuilding cost. (If I understand the provisions correctly).

What do you...or any forum members think of this approach ? TIA

 

[adjusterjack]

A reverse mortgage is a bad idea. They are rip-offs with high interest rates and high fees.

Before you make that kind of decision, get a copy of the loan contract and read it a lot more carefully than you have read your insurance policy.


Don't rely on anything somebody "told" you, or summaries that you find on the internet.

 

[Victor Newman]

Yes, we will read every word. As I understand it so far....the fees, interest and mortgage insurance are rolled into the monthly balance due, which is paid ....when we die or move out. It does sound good.......too good to be true ? Better Half and myself are in our 80's.

 

[adjusterjack]

I looked into one a couple of years ago and found that the loan-to-value was too low, the interest rate too high, and the fees ridiculous. The reverse mortgage is weighted heavily in favor of the lender.

Is your house paid for?

 

[Victor Newman]

No, house is not paid for. We owe lender 150K. 30 year fixed and we have 16 years to go.

 

[adjusterjack]

Then the reverse mortgage will want to pay your lender and loan you the balance of whatever the loan to value percentage is.

Though there may be second reverse mortgages out there.

All I can suggest is you examine one, work up the figures and see if it works for you.

 

[Victor Newman]

Still mulling over a RM. My original concern was.....do we want to rebuild and live here in an area that was totally burned out. Miles and miles of no trees or homes. We live in a heavily forested area. Do we want to rebuild on a moonscape ? Even if our insurance company will pay enough for a total rebuild (which sounds doubtful as our septic system will probably be destroyed by heavy equipment at some point....and in ground pool)....do we want to live here. Don't think so.

So, we might walkaway with nothing... except the $$ we get upfront, in cash....and let the RM mortgage holder and government mortgage insurance folks figure out who gets what.

In the event of only our home being damaged or a total loss....we can live with this.

So, that is our present thinking. Am I out to lunch ?

 

[adjusterjack]

No, you're not out to lunch. It's a personal decision that you make for yourself based on a thorough review of all the pros and cons.

That you don't think you'd want to rebuild in the event of a total loss has nothing to do with whether or not you have a reverse mortgage. You still have a house full of personal property that you are insuring and you'll still have to find another place to live.

We owe lender 150K. 30 year fixed and we have 16 years to go.

Have you actually gotten a quote from an RM company to see how much money you'd get out of an RM?

If you haven't, I suggest you do so and see if there is any advantage to it.