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Florida Mortgage Loans | Reverse Mortgages - are they all hype??

Daytime Television is inundated with many new commercials with trusted actors/spokespeople who are adamant that the Senior Citizen public needs access to the equity in their homes via a Reverse Mortgage.

The terms blared at consumers include Peace of Mind, Security, and Quality of Life. What they do not discuss is the downsides to such a program in the short and long terms.

There are very pronounced limits to the Reverse Mortgage that are not always outlined in advertisements or even by the Loan Originators that pitch these loans.

My personal and professional opinion is that there are situations where the reverse mortgages do fit. I think that some homeowners have certain goals which can be achieved through a reverse mortgage. I think that it definitely fits a niche market.

That being said, I do not believe it is meant to work for the masses. I believe it truthfully DOES NOT FIT most potential borrowers.

With a cash out refinance and funding an annuity, a Conventional Mortgage can create a better financial plan for future needs and emergency funds.

Click on the following link to read about the Pros and Cons of Reverse Mortgages.

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Posted by David A. Podgursky, MBA The Mortgage Go To Guy! on 07/17/2007 04:55 PM

Comments (9)

equity, reverse mortgage, florida, loan, palm beach loan, palm beach county, mortgage, retirement

Originally posted at: Boca Raton & Boynton Beach Florida Mortgage Blog: Florida Mortgage Loans | Reverse Mortgages - are they all hype??

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9 Comments on Florida Mortgage Loans | Reverse Mortgages - are they all hype??

JUL

2007

I've got to agree with you here David. While I've spoke to several people who have a Reverse Mortgage and a very happy with it, I really think there is such a small niche of people that this is the absolute best product for.

David... as Jason mentioned, I agree with you. I hate to say this, but when you see a certain program being aired on TV like crazy, it's usually people trying to tap into a market before it becomes known that it's not for everyone. Just like the pay option arms. You did a good job here explaining that it could be good for some, while not the best choice of others.

jeff belonger

David, we do not offer them so I do not know a whole lot about them. What I do know is that they take a long time to do, and have very high closing costs. I know that they are being done around here, but I have not talked to anyone that has one, so I don't have an actual example to draw from.

I got a good comment via email from a Reverse Mortgage Specialist...

I am pondering posting the entire email...

anyway... George, Jeff and Jason - thanks!

I am not saying at all that this is a BAD loan... I agree that the closing costs are high, the process takes a long time and the interest rate is much higher than something similar

This is a period of time when people don't want to deal with financial concerns... but this isn't the only tool to access that cash and therefore I think that a forward mortgage with a financial plan about how to deal with that money wisely is appropriate.

JUL

2007

It's not the loan, it's the loan consultant offering the program that makes a scenario good or bad. Luckily we have professional mortgage sources like you.

David,

Every loan I ran through for a reverse, seemed to come back with the client getting very little money and paying alot in closing costs, I also know that the clients are responsible for the taxes and insurance on their own. the only advantage is a client in foreclosure can utilize this loan with no problem..

Good Post,

Tom Weiss

JUL

2007

There's a lot of ads going on about Reverse Mortgage lately. It is true this type of loan program is only for certain type of customers. It is not a one size fit all kind of thing.

What troubles me is there are situation when a senior is not competent of making decisions can be tricked into these kind of loan programs.

JUL

2007

Hi David, At first I thought the idea was good so I wanted to be able to offer the product. But I have since decided that the FHA HECM product leaves a lot to be desired. I agree that a regular mortgage or heloc used with a separate investment account provides greater flexibility and security at lower cost or even no cost. We need a celebrity to tell the other side of the issue!

Bill Roberts

AUG

2007

Bill and I interviewed a financial planner for a special one-hour show we did about Reverse Mortgages a while back - they are soooo pricey and really limiting. As you mention on Blogger, it's a one-way trip financially.

RMs will be over-hyped as America's financial band-aid for older adults. And - like so many other cash-cow products - they are a tool to be used in an exact situation. But, it won't happen that way - greed and ignorance will prevail.

From a lender's point of view, I won't engage in any marketing campaign for these - everybody and their brother will be hawking them. Can you imagine any 70-plus senior forsaking his trusty (crusty?) old bank to work with a broker?!?!

I might catch some collateral work (based on personal referral and need of a trustworthy lender), but my focus will be on a different niche. I expect to do very few, if any. (And they are time-consuming multiple-visit loans. I think post-closing education and counselling will be a very large headache. Be prepared.)

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