Reverse Mortgages - Options for Seniors to Consider

Hey Big Gene - when the next round of things go bad......they will start blaming all those who originated Reverse Mortgage as the reason for whatever...........just like they did with all those who originated Option Arms.  It's a solid product with a very specific purpose!!!!!

Keep networking!!!!

Cheers

Remember it is only for those who have equity in their homes.  I attended a community event and a senior was hoping for pie-in-the-sky.  No equity on her home and a very sad attendee.

I'm not sure of all the specifics but my attorney told me she had trouble with one where the senior died and the family member was stuck paying it back after the senior took out all the equity from it.

the only sad part of reverse mortgages is the fees they charge the old people.  Too much in my opinion

Someone mentioned blame and that i sprobably closer to the truth. Mortgage people will be accused of taking advantage of the elderly.

I agree that this isnt the right option for all seniors but this is a great program for some. Reverse morgages have a bad stigma to those who dont understand them. Too many people think they are some scheme to take someones house.

Good info Gene thanks, but these mortgages still scare me.

I agree with you Gene, there are still misconceptions surrounding "Reverse Mortgages". They can be extremely useful for estate planning and/or long term care. It is imperative that the senior citizen, and any interested children or other family members,  have a clear understanding of the pros and cons and are completely comfortable before moving forward. there is still some negativity surrounding these loans from the early days of their conception. There are many safeguards in place now and the available products are quite useful for many situations, as you noted above. There is also a mandatory session from a unbiased, State approved counselor prior to even taking an application.

Interested parties can gather much information from the web from organizations such as AARP or the the NRMLA to help in the decision making process.

Hey Gene, You don't mention the difference in a plain vanilla bank Reverse Mortgage and the FHA/HUD guaranteeed Reverse Mortgages. FHA version are the only ones that are fully guaranteed for default to protect the seniors and their estate in perpetuity. In the event of negative equity occuring the senior(s) can continue to live in the home and walk away when they like without owning a dime. I know a former financial advisor in California whose job it is (karma) to foreclose on the estates of seniors whose properties lost value against the note of those not FHA/HUD guaranteed.

I think it's important to point out the different programs exist. The state of Washington has outlawed all but FHA Reverse Mortgages due to predatory and abusive practices of some the the televised programs hyped by bankrupt hollywood icons.

Gene,

I can certainly appreciate another investment vehicle which is working to aid our economy and help people as well.  Obviously, reverse mortgages are going to have a negative stigmata as they can be fraudulent and often unscrupulous agents/brokers/dealers are pitching them.

I do not deal with them, and have no plans to ever deal with them, so I must not cross a line in commenting as I am no where as familar with them as I am sure your experience warrants.

I would like to see you provide a list similar to the one you provided above, detailing the "CONS" of reverse mortgages, rather then the company line, advising counseling.

Thanks 4 posting.

Sean

Have you ever considered using this information as an Internet seminar using Facebook to get listings from these older seniors when they get ready to sell?

Great post, and follow up.  I've known of situations where seniors were eating dog food and refused to get a reverse mortgage that could provide them a modest monthly amount to get some decent food but they're afraid.  Plus, they want the kids to have the house when they're gone.  I asked where their kids were now, when they need food.  Tears came to their eyes, but they didn't budge.  I agree that the fees are too high though. These truly are homeowners that need help.

I'm going to use a portion of your follow up in my next newsletter, and offer a link to your post.  OK?

My mother did a reverse mortgage last summer and received so much less than she would have a couple of years ago but she needed the cash. I suggest that those considering a reverse mortgage weigh their options of doing one now vs. waiting until the market rebounds more. Thanks for the post.

Timing is the issue.  If seniors thinking about it can wait a couple of years they will get a huge benefit.  Their home will be worth more (they get more cash) they will be older (they get more cash).

I see nothing here that convinces me that a reverse mortgage is a good way to go. The commentary about being reduced to eating dog food and wanting the kids to have the house further reenforced how lucky I am to have 2 loving adult children living houses thar are quite nice.  Plus I am reasonably certain that I am still welcome at their homes for a meal. Seriously, reverse mortgages are just another device for the banks to make money and a questionable device at that.