What is the Perfect Reverse Mortgage Borrower
As a loan officer working exclusively with reverse mortgages, I speak to many prospective borrowers on a weekly basis. I'm always in the process of evaluating them as real customers.
I certainly don't tell all of them how great the reverse mortgage is for them. It's simply not a great option for all of them.
If I were going to place a ranking on how good the reverse mortgage is for customers I'd say it would be bad, okay, good, and great. People fit into all ranking. Let's talk about great.
The thing I like to know is how long the borrower plans on being in the home. This is important because reverse mortgage closing costs are quite expensive.
What I'm trying to get at with my customer is if the cost to get the mortgage will be worth it to them. They have to understand that solving their financial issue will have a cost to it. Will the results be worth the costs?
The answer I like best from them is "until i die". This is best as the true cost of the mortgage, on an annualized basis, goes down the longer a customer stays in the home.
If you ever apply for a reverse mortgage the lender will furnish you with a disclosure detailing how much the loan costs you over time.
The disclosure gives snapshots of the annual cost of the mortgage over various years. You'll see how cost reduces over time.
Another perfect candidate is someone who simply can't make due on the income they have. Due to economic or health reasons they simply cannot do it on their income.
The fixed income customer actually makes up most reverse mortgages.
And the last is the attitude that the kids are fine and don't need mom and dad leaving as much as possible to them after passing. On top of that, "we have our own lives and we're going to live before we die".
The very nature of a revese mortgage doesn't work very well with those who must leave inheritance to the kids. The mear thought of interest accumulating and eating away at the kids inheritance makes them very standoffish.
To sum up a great reverse mortgage cadidate, we are looking for an attidute of us first, kids second; static income which isn't enough; and an extending mortgage period hopefully as long as the borrower lives.
I certainly don't tell all of them how great the reverse mortgage is for them. It's simply not a great option for all of them.
If I were going to place a ranking on how good the reverse mortgage is for customers I'd say it would be bad, okay, good, and great. People fit into all ranking. Let's talk about great.
The thing I like to know is how long the borrower plans on being in the home. This is important because reverse mortgage closing costs are quite expensive.
What I'm trying to get at with my customer is if the cost to get the mortgage will be worth it to them. They have to understand that solving their financial issue will have a cost to it. Will the results be worth the costs?
The answer I like best from them is "until i die". This is best as the true cost of the mortgage, on an annualized basis, goes down the longer a customer stays in the home.
If you ever apply for a reverse mortgage the lender will furnish you with a disclosure detailing how much the loan costs you over time.
The disclosure gives snapshots of the annual cost of the mortgage over various years. You'll see how cost reduces over time.
Another perfect candidate is someone who simply can't make due on the income they have. Due to economic or health reasons they simply cannot do it on their income.
The fixed income customer actually makes up most reverse mortgages.
And the last is the attitude that the kids are fine and don't need mom and dad leaving as much as possible to them after passing. On top of that, "we have our own lives and we're going to live before we die".
The very nature of a revese mortgage doesn't work very well with those who must leave inheritance to the kids. The mear thought of interest accumulating and eating away at the kids inheritance makes them very standoffish.
To sum up a great reverse mortgage cadidate, we are looking for an attidute of us first, kids second; static income which isn't enough; and an extending mortgage period hopefully as long as the borrower lives.
posted by Credit Counseling at
8:29 PM
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