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SHOPPING FOR A REVERSE MORTGAGE? WHAT QUESTIONS NEED TO BE ASKED?

By
Mortgage and Lending with Reverse Mortgage Advisor

Consumers want to be prudent and compare reverse mortgage options. Even with internet access, it is difficult to know what all your options are. You can go down to your local bank and ask about reverse mortgages; unfortunately a bank employee is limited to the products offered by their employer if they offer them at all. An independent reverse mortgage broker/originator will have access to more programs and more lenders. An originator of integrity will focus on your needs and desires not the loan program.

Often when I receive phone calls from potential clients, some of the first questions I am asked are what are the interest rates and how much does a reverse mortgage cost. While these are very important questions, a good reverse mortgage originator will validate that this is important information to attain, however, it is more important to first attain some primary information about who you are, why are you interested in a reverse mortgage, what are your goals or what do you want a reverse mortgage do for you. What are your financial and emotional needs for a reverse mortgage? Emotional needs? Yes, emotional needs.

 

A loan originator needs to know an approximate value of your home, your age & your spouses' age, and your homes address.

 

Questions they should be asking are:

•·        Is your home in good condition?

•·        Will your home need any thing, a new furnace, a roof, and windows?

•·        Do you need a lump sum? If so, how much and for what purpose? Do you have medical or credit     card bills? Are you helping a son or daughter buy a home?

•·        Are you looking for monthly cash flow? How much do you need?

•·        How much per month? For how long? Is this loan going to be used to help you maintain or improve your lifestyle?

•·        Is any equity protection important to you?

•·        Does it matter how quickly your equity decreases? Reverse mortgages are a negative amortization loan. They are cash flow tools. The answer can be different for someone who is in their 60's in comparison to someone who is in their 80's.

•·        Is it important that you leave any leftover equity to your family or heirs?

•·        Are interest rates important to you?

•·        Do you need an emergency fund?

•·        Is there a possibility that you or your spouse might need money in the future for care?

 

This might seem like a lot of personal information but any good reverse mortgage originator will get a full picture of who you are, what your needs are, what is your financial philosophy, comfort level and your goals before they quote you specifics on reverse mortgage programs.

 

Here are some examples on how a conscientious reverse mortgage originator will customize their search for you:

•1.    Mr. & Mrs. Smith are in their mid 70's, have a home valued at $600,000, need a new car, like the security of a government insured loan and want $1200/month to travel and supplement their income. They plan to sell their home if one of them passes before the other. I recommended a FHA monthly adjusting reverse mortgage to maximize cash flow and meet their attraction to a government insured loan.

•2.    Mrs. Jones is in her 80's and wanted $40k to fix up her house to sell. Her home is paid for. Value $250k. We ordered her appraisal. The appraiser reported the home had foundation issues and would be very costly to repair. I recommended the client not do a reverse mortgage as it would be difficult to recuperate any repairs she made to this home. I recommend she sell it as is.

•3.    Mr. and Mrs. Peterson own a home valued at $800k. They are in their late 60's and owe a substantial amount on their present mortgage. Their goal is to eliminate their house payment. They plan to stay in their home for the duration of their retirement. I recommend they consider a jumbo loan at a fixed rate; this program will give maximum proceeds and minimum costs.

•4.    Mr. Anderson is in his mid 70's needs a new car and wants money to do some cosmetic work on his home. He estimates it will cost around $50k. His home is valued around $450k. He indicated he may need more money in the future. I recommend we look at the FHA reverse mortgages available.

 

As you perform your research on reverse mortgages make sure your originator knows your goals as well as they know their reverse mortgage programs, don't be shy about asking for references. Ask them if they specialize in reverse mortgages. Ask why they are recommending a particular reverse mortgage program. Why do they think that program will fit your needs over another? A good originator will be forthright with information, responsible and prompt in their follow up and won't be shy about shopping for the best program possible to fit your needs.

 

If you or someone you care about have a question about reverse mortgages, call Angella 866-949-7030, e-mail aconrard@gmail.com or log onto www.reverse-your-mortgage.com

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- - Bogota, TN

Thanks for you for taking the time to comment on this subject in the Active Rain network.  AR is the new "cyber backbone" of the industry, and with it's uplink to Localism.com it is transforming the real estate marketplace. Agents who don't see which way the cyberwind is blowing are going to find themselves at a considerable disadvantage inside of three to five years.

Jul 04, 2008 05:56 AM