Reverse Mortgages – Good or Bad?

Lately there has been a lot of negative publicity on Reverse Mortgages, most recently an article by the NY Times talking about how dangerous they are.  But are they really as bad and dangerous as the media has made them out to be?

To answer this question, we need to first take a look at what is being reported as SO BAD!  Once we do that, we can talk about the REALITY of Reverse Mortgages.

The NY Time article spoke of how several senior citizens were forced out of their homes after getting a Reverse Mortgage.  It also spoke of how the default rate was on the rise.  When these statements were investigated, it turned out that the seniors that were losing their homes were losing them NOT because of the Reverse Mortgage, but because they failed to pay their property taxes.  A Reverse Mortgage requires no mortgage payment, however, your Property Taxes and Homeowners Insurance premiums still have to be paid by the homeowner.  With or without a Reverse Mortgage, a person will lose their home if they default on their property taxes.  This is FACT.

The other reason certain seniors were losing their homes, was because their spouse died and they were not on title.  In a Reverse Mortgage, ideally both borrowers need to be on title.  In some cases, one spouse may not yet be of age (62 or older) and can choose to come off title in order to receive the benefits of the Reverse Mortgage using the older spouse.  However, this poses a risk should the older spouse die.  It is IMPERATIVE that your Reverse Mortgage Professional understand the consequences of such an arrangement, and that you fully understand as well.  Other plans need to be discussed if this option is being considered.

A homeowner cannot be removed from their home as long as they are alive and living in the property (if they were on title after the Reverse Mortgage).  Providing that their taxes are paid, homeowners insurance is kept up to date, and the home is maintained.

Reverse Mortgages Provide Financial Strength and Stability

Let us remember what a Reverse Mortgage’s primary goal is.  It is to make the life of the Homeowner more pleasant, more comfortable and/or more fun and active.  It has been touted as one of the best financial tools available today.  But let us agree that any product or tool that is not used correctly, can be disastrous.  You would not sharpen your pencil with a chainsaw now would you?  The same goes for a Reverse Mortgage.

You owe it to yourself, or your parents if you are looking into the program for them, to sit down with a Reverse Mortgage Professional and ask the hard questions, and demand the facts.  You or your parent’s goals need to be put on the table, so the best Reverse Mortgage program can be recommended.

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Reverse Mortgages aren’t for everyone, but for most, they can truly be an invaluable tool to get back on top of life.

If you have any questions on the Reverse Mortgage or want to learn more ways it can be used to buy a new home or upgrade your current home, give me a call at (714) 455-9150 or leave a comment below.