Reverse mortgages can be godsend for seniors

by Ryan Smith22 Aug 2014
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.

“First and foremost, there’s really no product in the world like a reverse mortgage,” says Jonathan Scarpati, vice president of Urban Financial of America’s wholesale division. “I don’t think there’s another product in the world that will allow you to borrow money and not make a payment. It’s a huge advantage to a senior. Many of these people don’t have the income to qualify for a loan – but this is based on age and equity. It allows them to tap into that equity without having to make a payment.”

Some seniors are leery of reverse mortgages because of horror stories about elders losing their homes. But those stories leave out one important fact.

“The only requirement of the program is for the borrower to pay their taxes and insurance. Even if you’re not in a reverse – if you don’t pay your taxes and insurance, the county’s going to take your house from you regardless,” Scarpati says. “So the requirements aren’t any more or less than any senior would have just living in a home.”

And the advantages for seniors are numerous. A reverse mortgage can give older borrowers the opportunity to improve their quality of life – or access to ready cash when they need it most.

“One of the greatest parts about releasing the proceeds is that the proceeds can be used for anything and everything the borrower wants,” Scarpati says. “We have seniors using the proceeds simply to travel, go see the grandkids they don’t normally get to see. You could use the money for medical expenses. You could use the money for long-term care or estate-planning options. Long-term care is a big one, because there’s a trem3endous need for long-term care insurance, but most people can’t afford it. Here’s a great way to unlock some cash that can pay for something really important in your senior years.”


  • by Therese Moore | 8/22/2014 6:45:26 AM

    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.

  • by John Reid | 8/22/2014 12:02:43 PM

    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.

  • by Cynthia | 8/23/2014 7:34:30 AM

    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.


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