When to Use the Reverse Mortage as a Solution
The mystique of the reverse mortgage is being continually lifted by a barrage of advertising coupled with the senior community essentially being forced by basic economics to look at it as an option.
The reverse mortgage is an exceptable and real financial problem solver if it is used in the right circumstances.
That being said, it has shortcomings and is not the best tool for everyone. I'm often asked by my prospective customers, "Do you think this is the right thing to do?"
I'm always a little taken back when they ask me this question. I mean, afterall, I make money only when the loan goes through my company. If I weren't an honest guy I may be inclined to promote my best interests.
Well, their question in no way compromises my integrity, and I, in return, ask them as to the length of time they expect to stay at the house before moving. This is the big question.
Why? Reverse mortgage closing costs are high to the point that if the senior vacates and sells the home in the short term it makes getting the loan a very expensive proposition.
The answer I like to hear is, "I'll be in the home until they carry me out." As a borrower stays in the home longer the cost of the loan continues to decrease as the years go on.
Regardless of each individual's unique situation the basic rule of thumb is to be in the home at least three years.
Being in the home for any length of time less than that would be prohibitively expensive, and i may suggest other financial alternatives.
The second point is to look at the relationship between the borrower's income as it pertains to the problem which the borrower is attempting to solve.
For instance, some incomes can change to catch up to and solve an economic troublespot. Fixed incomes, on the other hand, usuallly cannot. The duration of the financial issue plays a role as well.
Here is your typical reverse mortgage customer... He plans on staying in the home at 3 years or longer. His income is fixed and can't change to meet his financial needs. The reverse mortgage makes sense for this man.
The reverse mortgage is an exceptable and real financial problem solver if it is used in the right circumstances.
That being said, it has shortcomings and is not the best tool for everyone. I'm often asked by my prospective customers, "Do you think this is the right thing to do?"
I'm always a little taken back when they ask me this question. I mean, afterall, I make money only when the loan goes through my company. If I weren't an honest guy I may be inclined to promote my best interests.
Well, their question in no way compromises my integrity, and I, in return, ask them as to the length of time they expect to stay at the house before moving. This is the big question.
Why? Reverse mortgage closing costs are high to the point that if the senior vacates and sells the home in the short term it makes getting the loan a very expensive proposition.
The answer I like to hear is, "I'll be in the home until they carry me out." As a borrower stays in the home longer the cost of the loan continues to decrease as the years go on.
Regardless of each individual's unique situation the basic rule of thumb is to be in the home at least three years.
Being in the home for any length of time less than that would be prohibitively expensive, and i may suggest other financial alternatives.
The second point is to look at the relationship between the borrower's income as it pertains to the problem which the borrower is attempting to solve.
For instance, some incomes can change to catch up to and solve an economic troublespot. Fixed incomes, on the other hand, usuallly cannot. The duration of the financial issue plays a role as well.
Here is your typical reverse mortgage customer... He plans on staying in the home at 3 years or longer. His income is fixed and can't change to meet his financial needs. The reverse mortgage makes sense for this man.
posted by Debt Consolidation Loan at
11:10 PM
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