Donna, Thank you for an accurate post about Reverse Mortgages.  In high-cost areas, a Reverse Mortgage can represent a significant difference in the quality of life Senior Citizens experience in retirement - without the need to sell their home to attain it.  Many Seniors refuse to consider assistance from family members and a Reverse Mortgage helps them utilize the primary asset that their hard work and dilligence paid for.

Donna, thanks for the post... Now I feel confident in explaining this to my grandmother...

Way to break it down, Donna!  The reverse mortgage is a great product - I have helped several people (including family) pay off debt, get rid of their house note, and even get a small check monthly.  Can't say enough about them!

To be honest, I've been scared of reverse mortgages ever since I had a seller who barely had enough left to cover her sellling costs when she became incapacitated and had to go to a nursing home.  This does a good job of explaining the product, and maybe I'll have to open my mind again to the potential.

Wendy:  I was probably the most cynical of all about the Reverse Mortgage because of my own parents.  I would never want to see them taken advantage of after all of their years of very hard work.  Attending a workshop (and even in the workshop) I was still skeptical but as I investigated further, I really do see the good in this for seniors with a need.  Thank you for your comment.

Justin:  I am happy to know the information in this post was helpful to you.  I plan to discuss it with my own parents but I had to make sure it was something I could trust.  Still, I am a very cautious person, mistaken sometimes for pessimism, but it's really positive thinking with a lot of reality checks (got that one from Donald Trump).  I advise each person to do their own research in addition to the informaiton in this post and be leary of the info on the internet.  One good thing that is done in this process is they will send a HUD counselor qualified in this area to thoroughly counsel seniors.

Gareth: My mind was closed shut when I first heard about this.  I would not give James Garner or Robert Wagner an extra second, I scrambled for the remote and turned the channel as fast as I could, absoultely refusing to hear anything about it.  Then a local attorney had a workshop and I guess my mind opened just a tiny bit since I decided to go.  Mostly, I thought perhaps, as a Realtor and my market is made up of seniors, that I should be ready to discuss this topic with some degree of knowledge if it came up and I figured my suspicions would be proven to be correct so that's really why I went to the workshop. But it did the opposite and I had to write the post.  I am glad to see that it has bee helpful.

Magaret - my dear Margaret - I would only be repeating myself from above so let me just say that you are a blessing and a treasure and I thankyou so much for taking the time to read my posts.  Your opinion means a great deal to me.

i believe one of the most important features of the reverse mortgage process is the need for the borrowers to receive independent 3rd party counseling, before i can proceed with their application. the counselor is going to provide other options and answer any/all questions. a certificate of completion is required.

i have told everyone, be it a senior, their family, or their advisors that 2 of the options are to do nothing, or nothing at this time, in regards to taking a reverse mortgage.

it's a great program and like any mortgage program not for everyone. 

Thank you very much for sharing, I need to do more research on the program since the demand should increase over time.

just for the recors...I did my first reverse mortgage in 1983... not new at all and fairly tried and true

Jay:  I like the options you mention and I think Reverse Mortgages is trying to overcome a stigma from way back.  It does appear to have merit and worth checking into as far as that goes. Thank you for your comment.

Shane: I expect the demand to increase over time as well as more and more baby boomers reach 62 and older.  I thought I better get a jump on it.  Thank you for your comment.

Perrin: They mentioned in the workshop that reverse mortgages have been around and that's where some of the stigma is coming from.  Congress passed legislation in 1988 regarding the HECM where there are no payments; non-recourse and tax free line of credit.  I'm not familiar with Reverse Mortgages beyond what I have recently learned.  Thank you for your comment.  It sounds like you had success even way back with these.

Thanks Donna for good info.  We get a lot of excellent articles on reverse mortgages in AR - but they are hard to find without a subject search.  There is a reverse mortgage group you may wish to post to.

The primary criticism I hear of reverse mortgages is that they have high up front fees.  I believe that this is a different product than a traditional mortgage and comparison to  traditional fees is not useful.  The government programs (Home Equity Conversion Mortgage or HECM) have a federal insurance component that guarantees that the debt to be repaid in later years does not exceed the resale value of the house.  Monthly interest and fees are accumulating, after all, so that, unlike a traditional mortgage, the amount due when repaid will be more than the original amount borrowed.  The insurance assures the borrower that they are never upside down in the loan - no matter how long they live in the house.  The premium for this insurance is a component of the fees that does not appear in a traditional mortgage product.  

New major players are entering the reverse mortgage market - such as Bank of America and Nationwide.  Competitive pressures will, I believe, reduce the fees somewhat as new products are introduced.  But expect the fee structure to remain high, compared with traditional loans - because they are a very different product.  The reverse mortgage is not for everybody but can be a significant benefit for the right situation.  The reverse mortgage provides cash in a lump sum or monthly cash flow - and eliminates monthly mortgage payments.  Two significant benefits to seniors on a tight budget with insufficient retirement income.  It can make the difference in allowing seniors to continue to live in their home - or can let them sell their home to downsize and help to purchase a new retirement home for less cash out of pocket (maintaining more of the sale proceeds of the house they sell in their investment accounts).  

For the right situation the reverse mortgage can be an excellent planning tool.  Naturally, I would advise anyone one to be sure to talk with their professional tax and estate and financial planning folks and get the answers to their questions.

Ted:  Great information and I will keep this with my file.  I really want to know all there is to know about this type mortgage, the good and the bad.  You've made some outstanding points that I did not know about.  But I totally agree that this type mortgage is not for everyone and given the right situation could really help some seniors out.  Thank you very much for taking the time to provide greater clarification.

Hello, Donna!  Very informative and easy to understand.  I've often thought of this program but I haven't been asked about it so I've not done any research.  Thanks for sharing!

Yolanda: My market has a lot of young seniors but as baby boomers age, I expect this to come up a lot more.  I thought I should do my homework.  Did you know there was a group dedicated to Reverse Mortgages?  I had no idea.  Check out Margaret Woda's blogs on Active Rain when you can.  She is wonderful.  Thanks for stopping by.

Donna, thank you for a thoughtful, well written post!  I had already added you as an associate, but now I have to go back and add you to my group AR Educators!

Mike in Tucson

Mike:  You give me too much credit but thank you for the associate add and whether I belong in the AR Educators is highly questionable.  Thanks for reading my post and taking time to leave a comment. 

Michael:  Thank you for reading my post and leaving a comment.  It's nice to know what other members think.

I also USED to be against Reverse Mortgages, but after learning so much more, am a big proponent in MOST instances.  I would still say, the original private Reverse Mortgages programs were a rip-off, and I havn't seen them lately, so do not know if they are still around.  If they are I would never recommend them to anyone, but the majority of HUD back programs that are out there today are a tremendous benefit to seniors!  BTW, the loan balance can technically exceed the home value, BUT the mortgage insurance that is required will cover that shortage so the borrower or their heirs are not forced to pay this shortage when the loan is satisfied.

Ronald:  Thankyou for your comment.  I was very skeptical of the Reverse Mortgage at first and think some of my skepticism was because of the original programs you mentioned.  Still, I hope seniors will be very careful and fully understand what they are getting into or at least a loved one or a trusted friend will guide them.  I think this loan option works well for specific situations.

Great info Donna.  I have a vague understanding of reverse mortgages, and didn't realize that counseling was required for borrowers to get a reverse mortgage.  I think that's great, because I would hate to see some seniors get taken advantage of.

Tiffany:  I totally agree with you and I was very skeptical when I attended a workshop but was surprised in a postive way when I found out that the reverse mortgage can truly help some seniors in specific situations.  One thing I thought was really neat for markets like mine and yours, where we specialize in second homes, vacation homes, etc.  is seniors can take the money on a reverse mortgage and buy another home.  Thank you for leaving a comment.  I appreciate your feedback.

Very informative and well written.  Thank you!

Joyce:  Thank you for your comment.  This has become a very interesting topic for me to explore.  I think we will see more of these in the future as baby boomers age.