Who is a Reverse Mortgage Candidate
Reverse mortgages are becoming mainstream lately. Perhaps it's Robert Wagner, or maybe its life circumstance creeping up on today's seniors forcing them to use the reverse mortgage.
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.
Regardless of each individual's unique situation the basic rule of thumb is to be in the home at least three years.
Being in the home for any length of time less than that would be prohibitively expensive, and i may suggest other financial alternatives.
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.
Is the financial trouble going to last through the year or will it be lifelong? Are incomes variable, such that the issue, be it short or long term, can be overcome? Are incomes fixed?
The conservative answer to the question is if the borrower intends on staying in the home indefinately, and current or future income cannot solve the problem, a reverse mortgage is a viable financial lever.
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.
Regardless of each individual's unique situation the basic rule of thumb is to be in the home at least three years.
Being in the home for any length of time less than that would be prohibitively expensive, and i may suggest other financial alternatives.
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.
Is the financial trouble going to last through the year or will it be lifelong? Are incomes variable, such that the issue, be it short or long term, can be overcome? Are incomes fixed?
The conservative answer to the question is if the borrower intends on staying in the home indefinately, and current or future income cannot solve the problem, a reverse mortgage is a viable financial lever.
About the Author:
Learn about the 5 major pitfalls of the Texas Reverse mortgage at this link. A wealth of information and numerous answers to frequently asked Texas reverse mortgage questions are at this link.
posted by Credit Counseling at
10:40 PM
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