Reverse Mortgage?

[oicu812nbama]

I've had two seperate cash strapped seniors ask me about reverse mortgages in the last month.
Is this a total rip off?
If not is it worth getting involved in or should i just pass it on to a lender?

 

[Hailey9]

I've had two seperate cash strapped seniors ask me about reverse mortgages in the last month.
Is this a total rip off?
If not is it worth getting involved in or should i just pass it on to a lender?

Most of the time when a home owner tells you they are cash strapped they can't afford the home anymore. Reverse mortgages need the eye of a good financial planner to see if they make sense for the borrower. Most of the time the best solution is to sell the house, bank the equity and downsize. Easier said than done when emotions are attached. And yes I would pass on this and maybe refer it out to someone you trust who specializes in reverse mortgages.

 

[msurrano]

I heard alot of bad things about these, and that the market is starting to become more and more regualted, other than that i dont know much about these sorry :/

 

[pcbinsurance]

Heyyyy, the Fonz says they are a good thing. Who am I to argue with The Fonz?

 

[Josh]

I'm licensed and with a bank that can do them (with great rates). It's like anything else, it's great for the right folks.

 

[Sherd]

I'm licensed and with a bank that can do them (with great rates). It's like anything else, it's great for the right folks.

Who are the right folks? What characteristics make them a good choice for a reverse mortgage?
sherd

 

[SportsNut]

Who are the right folks? What characteristics make them a good choice for a reverse mortgage?
sherd

Equity rich, cash poor.

Several traps to be aware of... too numerous or involved to mention.

 

[LGilmore]

Unless it's changed since I did one for my mom, there are so many safeguards in place that it is hard to do it wrong. Is it worth doing for commission? The brokerage I used to work for offered $100.00 for handling it. With about 3 inches of paperwork to go through and a ton of signatures, the meetings to set up, nope. I wouldn't try and earn money doing them as a representative.

Are they worthwhile for a senior. Worked great for my mom and continues to work great. Smartest thing I ever did for her, so to each their own.

To note, we did this during the real estate build up. We have taken probably 60k more out of the home than it is worth. the plan is when she passes, empty her stuff from the house and let the government own it. The biggest part of closing was the purchase of the policy for the government that allows us to walk away.

 

[Josh]

Who are the right folks? What characteristics make them a good choice for a reverse mortgage?
sherd

The are a number of considerations, but the biggest concern is how they feel about what happens to the house after they die. If they don't care, don't have money, and have equity, it can be great. If they need to pass the house to the kids its a little less clear.

A reverse mortgage is a loan and as is the case with nearly all loans there are fees and interest. If someone is looking to get a reverse mortgage to cover a temporary expense such as repair bills on a vehicle, probably going to not be worth it. That said, if the senior isn't as interested in maintaining the home as an asset, but simply want to be able to live in it for the rest of their lives and get some cash out, then that's probably a good fit.

 

[SportsNut]

the GAO (General Accounting Office) that outlines three problems with this consumer product:

1) the promotion of this product is often deceptive
2) the consultation before purchase is typically done over the telephone, rather than in person
3) promoters often engage in “inappropriate cross-selling”…they persuade seniors to use their proceeds to purchase annuities that generate large fees for the institution and generally are not in the best interests of the individual.

Caveat Emptor

______________________________________________

Adding one note of caution here. I've seen several cases where (usually) the wife was not on the RM, wether due to credit issues or age, not yet 62 at the time of the older husband initiated the RM. Well you got it, the husband dies first and the wife, not being a party to the RM has no rights to continue the RM, it is then due and payable or the property forecloses. I am seeing one of those right now, lady is 71 yrs old and was not on the RM, foreclosure just filed in Jan 2013. There should be a backstop here to eliminate the surviving spouse from being term'd on the RM whether they are a party to the loan or not. Just one of the other risks here.