Anyone use Reverse Mortgage/HECM For Purchase of your RV?

[cheryljor]

Hello all. Newbie to posting in Escapees forum here. We lived FT in in our 34' fifth wheel 2006-2008, then bought a house and parked the RV. We are retired now and are researching possibilities on purchase of another RV to live in FT again. This time...diesel pusher and sell the house. My question is: has anyone out there utilized a Reverse Mortgage/Home Equity Conversion Mortgage loan (HECM) for purchase to buy their RV, then sell the house? Sounds do-able, but at this point I am hoping to get opinions on the members' experiences on this topic. Thank you in advance!

Edited December 18, 2019 by cheryljor

[rockylarson]

We took out the HEL in 1999 to pay for a two month tour of Madagascar.  Used it again to buy our motorhome in 2003 as well as our toad.  Then a new roof on the house and a two month tour of New Zealand, Australia, and Fiji. Came in handy for our second toad also.

Paid it down to zero two years ago but still have the line of credit if need be.  Just about equal to a new Phaeton....just saying.

However we kept the house and don't intend on selling.

I don't know how you can sell the house when the bank holds the mortgage on the Home equity loan? 

I am waiting to see what others have experienced.

Thank You

 

 

[Dutch_12078]

A HECM "Reverse Mortgage" will give you about 40-50% of the equity value of your house less any outstanding liens. If that will be enough to purchase your RV, then your idea may work out. Beware of repayment time limits though, that may affect your timeline. HUD has some good information available that would be worthwhile looking into.

https://www.hud.gov/program_offices/housing/sfh/hecm/hecmhome

[cheryljor]

6 hours ago, rockylarson said:

We took out the HEL in 1999 to pay for a two month tour of Madagascar.  Used it again to buy our motorhome in 2003 as well as our toad.  Then a new roof on the house and a two month tour of New Zealand, Australia, and Fiji. Came in handy for our second toad also.

Paid it down to zero two years ago but still have the line of credit if need be.  Just about equal to a new Phaeton....just saying.

However we kept the house and don't intend on selling.

I don't know how you can sell the house when the bank holds the mortgage on the Home equity loan? 

I am waiting to see what others have experienced.

Thank You

 

 

Congrats! Sounds like you had excellent planning!

[cheryljor]

Very informative link! Thank you. I know I have much more research to do!

[sandsys]

We took out a home equity loan in 2008 to buy our first full timing RV. The loan was then paid off at closing when we sold the house. Lots of calls to various places to make all the wire transfers but it went smoothly.

Linda Sand

[Dutch_12078]

The OP is asking about a HECM (Home Equity Conversion Mortgage) commonly known as a "Reverse Mortgage", not a HELOC (Home Equity Line Of Credit). Completely different critters....

[accumack]

My understanding is you must live in the house. Once you leave the money is due. A HECM is different from all other types of mortgages. It does not become due for as long as the homeowner lives in the property as their primary residence, continues to pay required property taxes and insurance and maintains the home according to FHA requirements.

[remoandiris]

17 hours ago, rockylarson said:

I don't know how you can sell the house when the bank holds the mortgage on the Home equity loan? 

The same way a person sells a house when the bank holds a regular mortgage.  The bank gets paid and whatever is left over goes to the seller.  Very simple.

[Dutch_12078]

3 hours ago, accumack said:

My understanding is you must live in the house. Once you leave the money is due. A HECM is different from all other types of mortgages. It does not become due for as long as the homeowner lives in the property as their primary residence, continues to pay required property taxes and insurance and maintains the home according to FHA requirements.

Exactly, and "live in the house" does not preclude normal absences for vacations, snowbirding, etc.

[mptjelgin]

4 minutes ago, Dutch_12078 said:

Exactly, and "live in the house" does not preclude normal absences for vacations, snowbirding, etc.

I agree. We continued to "live in our house" the first two years that we "full-timed".  We returned for a week or two in the Spring and Fall, but until we put it on the market and sold it it was considered to be owner-occupied. 

[Ray,IN]

We re-financed our house to buy the MH, mortgage is 3.5%, which is much less than RV financing. We then doubled up on mortgage payments, with the 2nd going to principal only. Were we not financially responsible this may have not been a good idea.

[Sehc]

I know of two people that outlived their "reverse mortgage". They were put out of their homes. 

[mptjelgin]

THIS would seem to indicate that there are specific circumstances that could result in the loss of the home, and "outliving" the mortgage isn't one of them.  I wonder what the specific circumstances were of the two cases you are aware of.

[Kirk W]

58 minutes ago, Sehc said:

They were put out of their homes. 

Please tell us more as I know someone who is looking into a reverse mortgage.....

Quote

Can I Lose My Home?

The answer is yes, you can lose your home with a reverse mortgage.  However, there are only specific situations where this may occur:

• You no longer live in your home as your primary residence. 
  • You move or sell your home.
  • You are away from your home for more than six months of the year for non-medical reasons.
  • You are away from your home for more than 12 consecutive months.
  • You pass away and your spouse or partner is not listed on the loan as a co-borrower or non-borrowing spouse.
• You stop paying property taxes and homeowner’s insurance.
• You don’t maintain the home according to FHA requirements.

Failure to meet these requirements can trigger a loan default that may result in foreclosure.

 

Edited December 20, 2019 by Kirk W

[richfaa]

We have had a Home Equity Loan for many years. We use it when we need it. The interest rates are low and $$ can be available  in seconds. 

 

[ToddF]

The reverse mortgage doesn't make sense for the OP. (Planning to sell home and go FT). A HELOC (Home Equity Line of Credit) would make much more sense, involve very low fees in most cases, and would simply be paid off at closing when the home is sold. A HELOC with a loan to value ratio of less than a certain %, will usually not require an appraisal. Closing costs are a fraction of those involved in a reverse mortgage or traditional mortgage.

Reverse mortgages involve steep fees and come with the unpleasant experience of getting a monthly mortgage statement showing an ever increasing balance due to the lender. As long as the homeowner keeps current on real estate taxes and insurance, the homeowner can usually stay in the home until death. For a retiree with limited resources, who absolutely wants to stay in their home, it's an option worth exploring, when staying is otherwise not financially feasible.

There are no commissions paid to the originator of a home equity line of credit. On the other hand, mortgage originators get a big fee when a reverse mortgage is sold because of the high fees and potential profit to the lender.

Wings Financial is a good place to start for a HELOC if you have the ability to join them. 

[Sehc]

I don't know the exact circumstances. I do know it wasn't anything on that list. My uncle was told he had collected all the money agreed to. He had to repay or move out. The house was put to sale, he moved in with his daughter. All I am saying is be sure to understand the contract, and how long you plan to live.

Edited December 21, 2019 by Sehc
spell check error

[mptjelgin]

My recollection is that in the early days of reverse mortgages regulations were very loose and there were some really bad ones.  At this point I think that they are more regulated in terms of what can and cannot legally be done.