PS - Credit wise, they have maxed out all of their major credit cards, close to maxed out their store credit cards, maxed out my cc (that I had loaned them just in case before I knew they were sinking financially). If they had to come up with a 5k closing fee, there is just no way!
They do not want to accept help in anyway.
The most they will accept is birthday money for a specific thing, like golf or getting a haircut. They will accept money for Thanksgiving dinner and Christmas dinner. And that they don't have a choice on cuz I put it directly into their bank account.
I'm sorry to hear about your parents troubles. How a reverse works is the youngest borrower is given a portion of the value of their home. The more equity in the home, the more money they would qualify for.The older the borrower, the more they qualify for, it has to do with life expectancy.
Youngest Borrower 1 (you said mid 70's so I'm going with 75 yrs old)
Home Value : 100,000
Principal Limit (how much they can borrow based on age & value): 74,100
Net Available( if no liens, mortgages on property): appr. 62,000
Now the costs to do a reverse are high, I cannot tell you a lie. However the benefit depending on one's needs can be great!! Basically the bulk of the cost are the origination fee which is capped at $6000 but will never be less than $2500. It's 2% of the value of the home, up to 200K, anything over and above 200K it will be 1% added capped at $6000. On a 100K property 2% is only 2K, the fee will automatically be $2500. Also, a reverse mortgage is insured by HUD, and thats at 2% of the value of the home, no cap. The rest of the fees are appraisal, credit, counseling (mandatory), title charges, flood certificate, recording stamps, etc. The cost to do the loan should be the same no matter where your parents shop b/c the fees are regulated by HUD. You may find a broker that's willing to reduce the origination fee, or a title company that is willing to trim some fat, but thats about it. It is what it is. If you are interested in shopping for your parents I'd be glad to help. Send me a PM. And make sure that you look for a Fixed rate product, qualifies people for more money, the rate right now is 5.56. There are some adjustable rates out there that will allow for a line of credit to be set-up, whatever is not used will not have to be paid back. With the fixed, you have to take all the cash in one lump sum.
The thing of it is Wells Fargo does reverse mortgages, you would wonder why they wouldn't automatically try to help your parents by refinancing them into a reverse. I personally dislike Wells Fargo. My bank Wachovia was bought by them an I immediately closed my account. They are so rude to our seniors and really don't care about anything but the money. I wouldn't have my worst enemy go to Wells. One of my reverse clients almost lost her home to Wells. We asked for a "stay" on the foreclosure, just so we could finish the transaction and they said they would only agree to "stay" if they did the reverse themselves, otherwise they would continue to foreclose. Thing of it is, apparently they couldn't make the deal work for her, so she came to us, and we made it work.
I agree Wells Fargo is not customer service orientated.
I had a mortgage with them and they screwed up applying the monthly payment every single month. They yelled and screamed at me that they were NOT a bank. They insisted I pay JUST the required amount and not a penny more. I fired them as my mortgage company. Lol - they would not let me open a bank account because they have no bank branches near my residence. Therefore, I could not do direct deposit into my Wells Fargo bank account (which was because they would not allow me to open a checking or a savings account), which meant I had to snail mail my payment in every month. Of course, everyone knows that takes at least 7-10 days, if not longer to reach it's destination! And they'd cash the check (it would clear MY bank) on the 25th, but not be credited to the mortgage account until the 5th. *rolling my eyes*
With my folks, when they wanted to refinance the house, WF said no. But you have a 7 yr old van, how about you take out a loan on that? Which they did. Which put them further behind. If they couldn't afford the current minimum payments, how is taking out a 2k loan on a van going to help? They traded one debt for another, which in the end, cost them more per month.
When they needed help again, WF said we can talk about the refi on the house, but you will be turned down. Then gov't help came along. They tried that and were turned down flat. The only thing WF has agreed to, which my parents wont' agree to, is to add the fees to the back end of the loan. Their monthly payment would go up or they would have a balloon payment. But either way, they will still always be reported at least 30 days late for another six months. (The time to do everything and get it processed.) They have like 27 or 28 yrs left on the loan.
WF is the same company that went to them -- actually called them up -- and said we noticed your house has gone up in value, interest rates are low, let's do a refi! My folks were struggling before, but at least they were making some headway.
There's not much I can do to help them. My budget is straining at the seams until more money starts to flow in. But at least I am on a cash basis right now. Saving up for surgery. Making payments on medical bills.
I realize, I will probably be in a similar boat soon. Retire then buy a house. While I am mad at WF for taking advantage of my parents, my parents could have said no. I know that I will be getting a mortgage that will last into my 70's....
I called today and tried to have a heart to heart with mom.
They were turned down for a reverse mortgage. They are finally almost even on their loan and their home value. ALMOST.
Sounds like they are totally out of options.
My question: Who are the best lenders for this product? Can anyone approximate the average cost now. Thanks