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They Just Don't Understand Reverse Mortgages

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Mortgage and Lending with Mortgage Banker

Sorry I just had to post this.  This was a comment I recently made on another blog

People just don't understand reverse mortgages.  Yes, THEY ARE NOT FOR EVERYONE!  But what about that 75 year old couple who have maybe one or two children who are well off and just want to see their parents increase their quality of life.  In most cases THE CHILDREN OR THE HEIRS OF THE ESTATE ARE THE ONES WHO RECOMMEND THE REVERSE MORTGAGE.  This takes pressure off of the children to support their parents and allows the parents to supplement their fixed income.  Also,  before you bash this product put yourself in the position of someone 62 years or older who has their retirement in stocks that just tanked 40%+.   How are you going to afford retirement?

If that did not drive the point home then consider this.   What about the wealthy elderly couple who have 4 children or so.  They want to see their children start families and buy houses while they are still alive.  They can pull say $400,000 out of their house that is free and clear,  and give each child $100,000 now rather than in 30 years when they pass away and the children themselves are reaching retirement.

I dont write reverse mortgages.  But they are a great tool for the right person.  Again,  they are not for everyone but in the right circumstance they can be the greatest thing that ever happened to a retiree.

Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes
Hi Justin, This is a good point for sure to ponder. Like most things there are those that will take advantage or things for the wrong reasons... Unfortunately...... I do agree with your comment about a reverse mortgage being a good thing to do for those who seriously need it. Hope you enjoyed your Thanksgiving Day. Patricia Aulson/Hampton NH Real Estate
Nov 27, 2008 11:35 AM
Brian Griffis
Realty Choice - Springfield, MO

Great point Patricia.  I agree the problem is that most people can't get their mind around a reverse mortgage.  Add to that, some companies do take advantage and add confusing fees and costs and then those get reported to the media, why wouldn't the average homeowner be scared?  Would you want to take a chance with the asset you have acquired over an entire lifetime?  Maybe if they made reverse mortgages easier to understand, charged no closing or other costs, just gave a certain amount to a homeowner and then a set amount that could be repaid at death, and make it all in plain English on one page, that would get rid of the uncertainty.  But that would be too easy.

Feb 13, 2009 01:14 AM