Prudently Using the Reverse Mortgage
People are really pretty trusting. As a reverse mortgage loan officer people actually ask me if the reverse mortgage is a good choice.
Im of the opinion that the reverse mortgage is purely situational. It is not something that one should go blindly into.
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.
The typical MO of my customer is a fixed income through SS or retirement. A few are still working but looking to be done with that.
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.
As we get older big medical needs are more likely, not less. As mature adults we must be prepared.
One of the problems of getting a reverse mortgage is all of the sudden an individual who is used to living on nothing has tons of money to spend. I caution to use discipline with the reverse.
For most the equity in the house is their largest asset it may be needed for a vital reason. The point is once its gone these folks wont have another money source to draw on.
If the concern is for the event of a major financial mess then the borrower needs to be very prudent. Many want to pay off a mortgage and eliminate that payment. Waiting to do this may be a good idea.
For those without mortgages who want to use the reverse as supplemental income I advise using the line of credit option. This option allows the borrower to take out money as needed and interest only accrues on used moneys.
A real benefit of this LOC is it actually grows over time and benefits the borrowers. Any unused money in the LOC gains interest for the borrowers favor.
As a guy who gets people these loans I know they are a real benefit. However, they can be misused and I implore you to use them with care.
Im of the opinion that the reverse mortgage is purely situational. It is not something that one should go blindly into.
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.
The typical MO of my customer is a fixed income through SS or retirement. A few are still working but looking to be done with that.
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.
As we get older big medical needs are more likely, not less. As mature adults we must be prepared.
One of the problems of getting a reverse mortgage is all of the sudden an individual who is used to living on nothing has tons of money to spend. I caution to use discipline with the reverse.
For most the equity in the house is their largest asset it may be needed for a vital reason. The point is once its gone these folks wont have another money source to draw on.
If the concern is for the event of a major financial mess then the borrower needs to be very prudent. Many want to pay off a mortgage and eliminate that payment. Waiting to do this may be a good idea.
For those without mortgages who want to use the reverse as supplemental income I advise using the line of credit option. This option allows the borrower to take out money as needed and interest only accrues on used moneys.
A real benefit of this LOC is it actually grows over time and benefits the borrowers. Any unused money in the LOC gains interest for the borrowers favor.
As a guy who gets people these loans I know they are a real benefit. However, they can be misused and I implore you to use them with care.
About the Author:
Live in Texas.. learn your stuff with a complete reverse mortgage guide here. Also, this site is a great q&a abouth the HECM in Texasright here.
posted by Credit Counseling at
5:46 AM
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