When you don’t know what you don’t know about reverse mortgages
Are you basing your opinion of reverse mortgages on what you and others don’t know? People say they’ve heard a lot of negatives about reverse mortgages or that they should stay away from them. When I ask what they’ve heard or why they were told to stay away from them, I get the answer, “I don’t know, I was just told to stay away from them.” Or they really don’t know much about them yet they are still negative about them. After I spend time educating them on the facts of reverse mortgages the response becomes much different: “Wow, this could be a life saver for me.” Or “That sounds wonderful.” And my clients who have their reverse mortgage in place are thrilled and pleased on how it’s changed their lives for the better – giving them security, independence, dignity, and control.
So my question to you is do you know the facts about reverse mortgages or are you basing your opinion about reverse mortgages by listening to the negatives and incorrect statements from those who don’t have the real details? If you were having health problems, would you listen to a plumber about what you should do about your health or would you go to a doctor who specialists in the area of need for the facts? The reverse mortgage is the same, get your facts from a reverse mortgage expert, not the media, politicians, a real estate agent, your neighbor, friend or anyone else who isn’t a specialist in reverse mortgages and can provide the true facts.
The media often has someone they call an expert from the financial or real estate industries talk about reverse mortgages as if they know what they are talking about. However, those of us specializing in reverse mortgages find a lot of incorrect and misleading statements by these so called experts. They too don’t know what they don’t know because they don’t consult with the true experts in the industry before giving information. Politicians who are trying to protect seniors haven’t learned the real facts about reverse mortgages so they too are giving advice and/or a fear factor based on what they don’t know. If they would talk with the experts they may do a better job of providing the facts versus spreading myths.
As a senior advocate and an expert who has specialized in reveres mortgages for 10 years, let me help you get some of the real facts. Do you know…
- A reveres mortgage is a mortgage with special terms for senior homeowners 62 and older.
- You own the home, no one else does.
- You may be able to stay in your home as long as it’s your primary residence or until your 150th birthday. (You are responsible for paying taxes, insurance, and maintaining the property and abiding by the terms of the loan agreement.)
- You won’t lose your home because of a reverse mortgage – you don’t have to make monthly payments.
- Tax-free money* is government insured and guaranteed to be there for you. (*consult tax advisor – but make sure they know the facts about reverse mortgages)
- You or your heirs get to keep any remaining equity after the loan is paid off.
- There is no personal liability to you or your estate when repaying the loan and you or your estate are not retaining ownership.
- There are no out of pocket costs, income or credit qualifications for the loan.
- Closing costs typically become part of the loan balance.
- A credit report is pulled to check for any federal leans or debts that would be required to be paid – not to check your credit score.
- You can’t access 100% of your home value at the time of your closing – the amount available is based on your age, you home value or FHA lending limit (currently $625,500), and an Expected Interest Rate.
- The funds may be received in a line of credit, lump sum, monthly payments or a combination of these.
- Line of credit grows
- Monthly payments may be received as tenure payments (for life as long as the home is your primary residence) or structured to fit your needs.
- Historically the interest rate is lower than conventional loans.
- Closing costs are comparable to conventional loans, in the big picture they are not higher – see my post: “Reveres Mortgage Closing Costs – High or Mythical”
- The majority of the loans are FHA insured (proprietary products aren’t currently offered in Minnesota).
- There is no magic number for how long you should live in your home – it all depends on your individual circumstances. However the longer you stay in your home the less expensive it becomes because the closing costs get spread out over a longer period of time (same for conventional mortgages).
While a reverse mortgage isn’t right for everyone, every one should at least know the real facts to determine if a reverse mortgage is right for their situation. Don’t go the plumber for your health problems. And don’t go to the media, politicians, a real estate agent, your neighbor or anyone else who doesn’t specialize in reverse mortgages for you to make an educated decision about reverse mortgages — learn the facts from a true reverse mortgage expert.
Having the facts my borrowers are thrilled with their reverse mortgage. I’ve been told, “You’re an angel.” “You gave me my life back.” And as Sylvia, wrote: “As a senior citizen, I had been having some concerns with my finances. Being on a limited income made much needed household repairs and property tax payments very difficult to meet. I was going to have to make a choice soon about whether to continue to live in my house, or move on to an apartment. The costs of continuing to live in my home were getting beyond my means, but I wasn’t ready to leave the home that I had raised my children in. I decided to use the equity in my house to make life easier and meet the financial obligations that I had. Beth Paterson was my representative. She was so easy to talk to and walked me slowly through the entire process. She was always there to answer any questions that I had, and continues to even long after the closing! It was a wonderful experience.”
Base your decisions on what you know from a reverse mortgage expert, not what you or others don’t know.