The Truth About Reverse Mortgages

By Author: David Reinholtz
Total Articles: 48
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We have all been exposed to information about reverse mortgages, their benefits as well as the negative aspects associated with them, yet it seems that not enough of us truly understand how to convey to our clients information about this option. Misinformation has a lot to do with the difficulties and the unstable bridge that we must cross in order to assure clients of its positive aspects.

Bracing for the Future

I have come across this many times when talking to average homeowners who have little to know real knowledge about reverse mortgages. One of the most harmful myths is that the bank can take a home or the borrower loses the home. I can't tell you how frustrating this is to encounter this kind of perception. It's certainly understandable, but something that we should all take a moment and realize.

A person's home is, in most cases, their greatest asset. As such, they are protective and cautious when deciding on what's best for their future and their future care. We have to remember that as our older clients age, the question of health care and long-term care becomes increasingly important. ...
... Long-term care isn't merely about maintaining their physical health, but also their financial well-being.

Before the economic crisis hit in 2008, it was already difficult for many families to afford nursing home care for their elderly family members. How many of us actually have a budget for this level of care? How many of us expect our children to care for us? I know a few hands went up at that one.

Thinking about the future is important, and possibly even more important now as we see the damage that has been done by the recent economic recession that has hit the global economy.

Balancing the Pros and Cons

As with any mortgage related issue, there are pros and cons to reverse mortgages. Unfortunately, the negatives have had more media coverage and have also spawned a host of half-truths and downright lies about it. There has been numerous news-related coverage on the major networks and while this helps, we want to remember that our business is to help clients make the best decisions for themselves and not the best for the moment.

Perhaps one of the best endorsement that reverse mortgages can have are the two major organizations important to seniors: The American Association of Retired Persons and The National Council on Aging. They advocate for the use of reverse mortgages in certain situations. This doesn't mean that everyone should consider a reverse mortgage.

Those homeowners who have a strong influx of revenue, whether from Social Security benefits or from pensions or retirement plans, may not require the aid of a reverse mortgage. Some clients have expressed interest in a reverse mortgage in order to take a dream vacation around the world. Of course, this is their prerogative, but it isn't advised for these situations. Discussions about reverse mortgages should revolve around the long-term care of the homeowner so that they can continue to live in their home and afford the proper level of care that they need, whether it is in the form of a home health aid, a companion, or other factors.

The home doesn't have to be paid off, of course, in order to quality for a reverse mortgage. Rather, there has to be some level of equity in the home and this will depend on the particular mortgage lender.

The Bottom Line

Is a reverse mortgage right for everyone over 62 years old? No. And will every mortgage broker or real estate agent have all the necessary answers for their clients? Not likely. When faced with questions about reverse mortgages, it's important to offer the truth about them and not speculate. That doesn't help anyone, especially the homeowner.

If you're faced with questions you can't answer, it may be best to find a specialist to refer them to. I believe that reverse mortgages will become more popular as the years progress, so learning all that you can about them can be a boost to your portfolio.

David

David Reinholtz is a professional Mortgage expert in Real Estate Industry.David is also a sales and marketing expert and trains professionals in every career field. David has personally trained tens of thousands of loan officers, mortgage brokers, real estate agents and individuals through The Close More University Seminar Series, LoanOfficerSchool.com Classes, Correspondence and On Line Learning, and countless private engagements and training events throughout the country.

David is the Founder and CEO of LoanOfficerSchool.com, an approved education provider for The Conference of State Bank Supervisors and The National Mortgage Licensing Systems' (NMLS) required pre-licensing education and continuing education.