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Reverse mortgages can be godsend for seniors

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Mortgage Professional America | 22 Aug 2014, 04:00 AM Agree 0
When originators are considering adding a product to their mix, it’s only natural to consider the advantages to their business. But in the case of reverse mortgages, it’s also important to consider the advantages to the customer
  • Therese Moore | | 22 Aug 2014, 06:45 AM Agree 0
    Reverse mortgage is perfect for people who are 62 years old and need assistance in paying their long-term care expenses. This is a federally-regulated way to draw income from the equity in your house while living there. This works this way, you need to continue paying for your taxes and insurance in order to finance your care expenses. Also, you need to make sure that your home is well-maintained. Once the mortgage period is over, you need to pay back the mortgage amount plus interest. This is what makes reverse mortgage risky. Foreclosure can happen if you fail to manage your money wisely, pay your insurance and taxes on time.

    This is very appealing for people who don't have much options when paying for long-term care. These are people who failed to plan early and anticipate their future care needs. It could have been much easier if they have purchased long term care insurance which and describe as a product that covers long term care services like assisted living facilities, nursing homes, CCRC's and the likes.

    Reverse mortgage is risky but if you know how to manage your finances, then you can take advantage of this. Also, it's easy to become eligible because there is no income qualification or credit checks. The only thing that matters is your age. So the older you are, the bigger the amount you'll receive. In my opinion, this is a reliable payment option for your future care needs, just be careful and responsible though.
  • John Reid | | 22 Aug 2014, 12:02 PM Agree 0
    Therese Moore wrote: "Once the mortgage period is over, you need to pay back the mortgage amount plus interest. This is what makes reverse mortgage risky. Foreclosure can happen if you fail to manage your money wisely".

    That line is totally incorrect regarding an FHA Reverse Mortgage.
  • Cynthia | | 23 Aug 2014, 07:34 AM Agree 0
    I help client with applications for and also close reverse mortgages, these are a specific product for a specific clientele. A reverse mortgage requires you to pay your taxes and insurance yourself, that is made very clear and there is no escrow account for this type of mortgage. The client needs to plan to do this, and most are doing this already is there home is paid for. The biggest concern is family and friends who swoop in to prey on the client once they learn that person has access to some cash. The family and friends will manipulate and deceive the client into believing they will pay back any and all money they can "borrow" and will continue to take until the entire amount is gone leaving the client in a worse situation than before. This is the time the client could possibly lose there home if they cannot pay their living expenses, taxes, and insurance. The family then grumbles about how the client cannot handle their money, blew the amount they received, and was taken advantage of by the predatory lender when what happened was a result of the predatory family and friends...sad. A reverse is like winning the lotto but at a smaller scale, I always advise the client to tell NO ONE about the reverse mortgage for this reason. The reverse is a great product for the right person, but it is hard for a vulnerable lonely person to accept that their family only wants their money and will neglect them again once there is nothing of value left for them to take. You just need to warn them about that fact and hope they are able to deal with their loving families.
  • Karen Lorenzo | | 25 Aug 2014, 09:03 PM Agree 0
    Once the need for care arises and you do not have long-term care insurance or you do not qualify for medicaid, home can the most significant asset in sustaining long-term care. As suggested, reverse mortgage is one good alternative for covering long-term care expenses especially if you don't have ltci and it is already too late for your to get one. The only risk you have is when you are not able to pay for your property taxes and insurance, so in cases when an elderly who uses reverse mortgage develop cognitive problems, there should be a designated person who will responsible handle their finances. Also, if you do not plan on staying in your home and make it as your principal residence, then reverse mortgage might not be a good option for you. I would say that reverse mortgage is good if you don't have any other option, but if this is the only option you have, then make sure that you understand the potential downsides involved.
  • Tomas Roberto | | 14 Nov 2014, 01:02 AM Agree 0
    Reverse mortgage are gaining popularity, however, seniors should be wary of availing this kind of system since there are downsides. There are pros and cons of using a reverse mortgage, it sounds very enticing to seniors when they learn that they can cash advance the future value of their house and they don't have to pay for it unless the senior die, and that is when the bank will foreclose the property. A report at abcnews stated that the government warned seniors that reverse mortgage is not "free money" so you have to take extra caution when considering this. If you don't really need the money, do not engage in reverse mortgage, unless you have exhausted all your resources and you have no options left. Even in terms of long-term care, also stated that RM is one way to pay for long-term care expenses, however, nothing still beats a traditional ltci policy. The product becomes famous due to advertisement and the fact that seniors have a choice of getting lump sum payment sounds encouraging, on the other hand, it can be helpful for those seniors who are not able to pay for their mortgage and are struggling for to pay for the cost of care and their house is the only one they have.
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