Deciding Whether or Not to Get a Reverse Mortgage: Educate Yourself on the Program Before Making a Decision
An article recently published by Buffalo News, titled "Avoid Reverse Mortgage Regrets," begins detailing the regrets past and present borrower have felt because they did not fully understand the reverse mortgage program.
In truth, many borrowers still don't understand the reverse mortgage, despite the recent changes through the past years, choosing instead to listen to advice of their neighbor who knew someone who had a reverse mortgage and was not happy with it.
Because of this, the first thing I make clear to my potential clients is that I will educate them on the program and various programs first before getting into anything else.
Is that program any more complex than a traditional loan? It can be but that is not a reason that should deter any potential borrowers or their caregivers from seeking out professional advice from licensed reverse mortgage experts.
The problem with listening to a neighbor is that they do not have all the details. For example, an elderly couple may have lost their house in the past "because of the reverse mortgage." In reality, they may have stopped paying their property taxes (which is grounds for foreclosure even without a reverse mortgage).
Most importantly, the article makes it a point to make sure readers know reverse mortgage counseling is not option but mandatory and is, in fact, one of the many ways consumers are protected against fraud and senior abuse.
In addition, caregivers can be present with borrowers and their spouses during counseling in order to make sure they understand everything as well.
Many seniors, because of all the "horror" stories associated with the reverse mortgage have opted for a home equity line of credit before even considering the reverse mortgage. In truth, while HELOCs may cost less and borrowers may have access to a greater principal limit, borrowers have to make monthly payments (most are only interest payments until the loan ballons) and, while the reverse mortgage line of credit increases yearly, a line of credit decreases or may stay the same but never grow unless you pull out more money if and when you qualify.
Currently, reverse mortgages still do not carry income and credit requirements, making it a worthwhile program for seniors looking for an alternative, long term retirement planning tool.
The article ends with the story of a widow who has been foreclosed on when she chose to remove herself from title at 57 when her husband was 62. While it is possible to add a non-borrowing spouse to a reverse mortgage when they are 62, it is contingent on there being enough equity in the home or a rise in property values in the area.
Thankfully, non-borrowing spouses can now be included in the loan with their spouse, along there may be less funds for the couple as the amount borrowers can receive is always based on the youngest borrower. Good news is the value for borrowers with spouses under 62 but over 55 is still worthwhile, especially if all proceeds will go into a line of credit that will be used under emergencies only or in the future. The added protection to your spouse can also be a powerful reason to consider adding them to the loan.
Consider the options in your arsenal, seniors before making a split second decision. It may make all the difference.
Interested in a reverse mortgage or simply want more information? Give PS Financial Services a call at (888) 845-6630 or via email at info@reversemortgage.com. We don't pressure those who inquire. We are simply here to help.
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