Reverse Mortgage -- Is it smart?

By
Mortgage and Lending with Benchmark Mortgage nmls 2143 NMLS # 198479

There are 5 key points to think about when you decide a reverse mortgage may be your best option.  Most important find an expert loan officer willing to help you make a determination.

1.  Why do you feel a reverse mortgage would benefit you?  If you are thinking of taking a vacation or reinvesting the money it would be very costly.  If someone is trying to sell you something and suggests you take out a reverse mortgage you should be very cautious of their intent.

2.  Can you even afford a reverse mortgage?  A reverse mortgage is very expense,  You do not make monthly payments but interest will accrue on the loan every month.  The younger you are when you take out a reverse mortgage (min age 62) the longer the interest will grow which in essence will increase the amount you owe. 

3.  Can you afford to use your home's equity?  If you are not facing a financial emergency you may consider another option.

4.  Do you have other options?  If you have the means to take out a home mortgage and make the monthly payments this would be a less costly option than a reverse mortgage.  Have you thought of downsizing and selling your current home to buy one with lower costs or in an area that offers more services?

5.  Do you understand how a reverse mortgage works?  You need to find out up front if this could benefit you or if there is a better option.  You must complete couseling and receive a certificate to move forward.  Your loan officer can give you the names of counseling agencies in your area.

A reverse mortgage can be the best thing since sliced bread if you understand and limited income.  It gives you the opportunity to use your home's equity while you need it.  It can help supplement an income, help with medical expenses or long term care.  You can make repairs on your home or purchase a vehicle and not worry about adding high debt to your monthly budget.  The money is yours to spend as you wish but wisdom is important. 

Comments (6)

Pat Champion
John Roberts Realty - Eustis, FL
Call the "CHAMPION" for all your real estate needs

This is good information to have on Reverse Mortgages you do have to know all the details and options before taking a Reverse Mortgage.

Jan 14, 2010 04:38 AM
Valerie Springer
Benchmark Mortgage nmls 2143 - Birmingham, AL
Home Loan Officer AL, FHA, VA, Conventional and Re

It is important the "Senior" understands how the mortgage works.  These are great but as with any financial transaction people need to be informed.  These are just some things to ponder.  Thanks for commenting.

Jan 14, 2010 05:09 AM
Ann Allen Hoover
RE/MAX Advantage South - Hoover, AL
CDPE SRES ASP e-PRO Realtor - Homes for Sale - AL

Thanks for the information.  I haven't run across anyone asking about this option.  It would be nice if I knew more about the advantages and disadvantages......it's on my list of things I gotta brush up on.

Jan 14, 2010 08:07 AM
Charles Stallions Real Estate Services
Charles Stallions Real Estate Services Inc - Gulf Breeze, FL
Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl.

As you say as long as we are educated, somewhere down the road I think this will lead to major suits brought families left with little to inherent. Plus the fact that seniors will claim to be taken advantage of because of course it couldn't be their fault.

Jan 17, 2010 08:09 AM
Valerie Springer
Benchmark Mortgage nmls 2143 - Birmingham, AL
Home Loan Officer AL, FHA, VA, Conventional and Re

Joyce you could be right.  This is why it is important to ask the "Senior" if they have children who need to be present at our meeting as well.  This will allow all questions to be answered and all parties educated.

Ann, I will be glad to answer any question you may have for informational purposes.  ;o)

Jan 18, 2010 02:08 AM
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

Great post Valerie and always a learning curve when something like this come up. Right, it may not be for everyone but it can help many.

Feb 01, 2010 11:15 PM