The Reverse Mortgage and Worst Case Scenario
Even though people calling me know I make money from them using me to get a reverse mortgage they still want me to tell them they are making the right decision.
You may not believe this but I always say it is not a great choice for everyone. Its situational and some borrowers should simply walk away.
I have a few borrowers with a bunch of money in savings but the majority have next to nothing and are looking for financial answers.
Generally speaking most are on social security and some form of pension, but others are still working and planning on retirement.
When they ask me their question Im primarily focused on their long term equity position in their homes. They may need that equity if a major financial issue presents itself.
Every day of our lives we roll the dice. Sometimes it comes up snake eyes and we must be there to answer the call.
Along these lines I like to see prospective borrowers use the mortgage intelligently to increase their disposable income and to use that income in the proper places.
The reason being is the house is going to be the biggest store of cash for any of these individuals. If that is floundered away they could be in a real bind later on when something big comes along.
For a very conservative perspective one should use the reverse mortgage when it is absolutely needed. If a mortgage exists maybe it is best to wait to refinance it with a reverse mortgage.
Some have their home paid off and simply want to add to their income. These folks should use a line of credit. By doing so a very small amount of interest accrues against the equity of the home.
Additionally, the unused funds in the line of credit will accrue interest for the borrowers favor. The net effect of this is increased borrowing power over time.
The whole point here is to be conservative with your biggest asset. If you need to take a trip or use a bit for fun money, do so. Life is for living, but use the rest frugally.
You may not believe this but I always say it is not a great choice for everyone. Its situational and some borrowers should simply walk away.
I have a few borrowers with a bunch of money in savings but the majority have next to nothing and are looking for financial answers.
Generally speaking most are on social security and some form of pension, but others are still working and planning on retirement.
When they ask me their question Im primarily focused on their long term equity position in their homes. They may need that equity if a major financial issue presents itself.
Every day of our lives we roll the dice. Sometimes it comes up snake eyes and we must be there to answer the call.
Along these lines I like to see prospective borrowers use the mortgage intelligently to increase their disposable income and to use that income in the proper places.
The reason being is the house is going to be the biggest store of cash for any of these individuals. If that is floundered away they could be in a real bind later on when something big comes along.
For a very conservative perspective one should use the reverse mortgage when it is absolutely needed. If a mortgage exists maybe it is best to wait to refinance it with a reverse mortgage.
Some have their home paid off and simply want to add to their income. These folks should use a line of credit. By doing so a very small amount of interest accrues against the equity of the home.
Additionally, the unused funds in the line of credit will accrue interest for the borrowers favor. The net effect of this is increased borrowing power over time.
The whole point here is to be conservative with your biggest asset. If you need to take a trip or use a bit for fun money, do so. Life is for living, but use the rest frugally.
About the Author:
For those living in Texas.. learn about the HECM right here. Also, this site is a great q&a abouth the HECM in Texasright here.
posted by Debt Consolidation Loan at
5:50 AM
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