When to Use the Reverse Mortage as a Solution
More commonplace than ever reverse mortgages are making their way into the senior community. Maybe it's famous spokesmen or basic financial trouble that expedites the process.
The reverse mortgage is an exceptable and real financial problem solver if it is used in the right circumstances.
Is it the best possible tool for everyone. If I said yes here you should stop reading and move on. It's not. I get asked by my clients, "Is this right for me?"
I'm flattered they trust me enough to ask the question. Don't forget I make money if they go forward with a reverse mortgage and zero if they don't. There may be a conflict of interest there somewhere.
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.
The very minimum acceptable time period, outside of an emergency situation, is three years.
Living in the house for a term shorter than 3 yrs makes the loan quite pricey. I would strongly look at any and all other financial options in this case.
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.
Incomes vary greatly. Fixed incomes, by nature, can't change to necessarily meet and beat some large or long-term financial obstacles. On the other hand if the hurdle is short term perhaps it can be worked out by some other means.
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.
Is it the best possible tool for everyone. If I said yes here you should stop reading and move on. It's not. I get asked by my clients, "Is this right for me?"
I'm flattered they trust me enough to ask the question. Don't forget I make money if they go forward with a reverse mortgage and zero if they don't. There may be a conflict of interest there somewhere.
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.
The very minimum acceptable time period, outside of an emergency situation, is three years.
Living in the house for a term shorter than 3 yrs makes the loan quite pricey. I would strongly look at any and all other financial options in this case.
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.
Incomes vary greatly. Fixed incomes, by nature, can't change to necessarily meet and beat some large or long-term financial obstacles. On the other hand if the hurdle is short term perhaps it can be worked out by some other means.
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.
About the Author:
Discover the 5 major pitfalls of the Texas Reverse mortgage at this link. A bonanza of info and specific answers to specific Texas reverse mortgage questions found at this link.
posted by Credit Counseling at
10:55 PM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home