Life mortgage?

Spook · Apr 1, 2013

A neighbor of mine is offering to sell me his house on a life mortgage. I really can't find much about it on the web. Anybody know how they are structured, how much down payment is normal? other terms?

The Red · Apr 1, 2013

If you are applying for a bank mortgage, it doesn't matter. Seller gets paid at closing. If the neighbor is doing a land sale contract of some sort, he wants you to have a life insurance mortgage. So if you die before it is paid off, the insurance company would immediately pay off the remaining principal and accrued interest from your last payment.

8N'r--WI · Apr 1, 2013

Spook--Can you give us more info? Can you describe how you think a "life mortgage" works, or how your neighbor thinks they work.

Is your neighbor trying to design a private "reverse mortgage" outside of the banking system?

Thanks, Tim

evilboweivel · Apr 1, 2013

I have seen this done where the seller gets to stay in the house until they die. You own the property, pay taxes, mortgage, etc. They have to pay utilities and upkeep. If there is a usable amount of land or the price is right then it works out ok
Good Luck
Ron

rrlund · Apr 1, 2013

Is this like one of those reverse mortgages?

Spook · Apr 1, 2013

I think that is what he is talking about. But he insists that it isn't a reverse mortgage?

LAA · Apr 1, 2013

The French lady that lived to 122 years old had one and the person paying the freight died several years before she did, he paid for 40 years and his estate had to keep on paying until her death.

gtractorfan · Apr 1, 2013

Reverse mortgages are constantly advertised on tv. The line that REALLY gets me is "you continue to hold complete ownership of your home". WHAT?? If you have complete ownership of your home that means you could sell it again!

rrlund · Apr 1, 2013

Don't know if they'd get a whole lot of response if they said "you keep complete 'responsibility' for your home".

JMS/.MN · Apr 1, 2013

Around here it"s called a "life estate".....means someone buys the farm, (typically to expand his land base), and lets the PO stay in the house until he dies, while new owner pays taxes and upkeep on the home. (Good to include adjustments for well, furnace, etc. repair/replacement). Relieves the seller of worries inherent to moving off the farm. It is not a reverse mortgage. Financing can be typical of any other sale.....C4D with typical 29% down to seller), bank mortgage, etc.

The Red · Apr 1, 2013

PO I figured as property owner. C4D is what????

paul · Apr 1, 2013

I was under the impression typically the orginal owner had to maintain and insure the house, the buyer gets the entire property upon death of the original owner. Payments until they die. Actuary tables like the insurance cos use would be a good idea for both sides to study....

Anything can be written up any which way, whatever both sides agree upon.

--->Paul

M Nut · Apr 1, 2013

Contract for Deed

504-1 · Apr 1, 2013

When I bought this place Grandma had the rights to the house for life, I paid the taxes and she paid the utilities. I had use of the land. The house had been made modern but I did have her pay for a bad water line after she called someone else to fix the leak.

Life mortgage?

Spook

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The Red

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8N'r--WI

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evilboweivel

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rrlund

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Spook

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LAA

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gtractorfan

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rrlund

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The Red

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504-1

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