More commonplace than ever reverse mortgages are making their way into the senior community. Maybe it's famous spokesmen or basic financial trouble that expedites the process.
It is a viable financial tool, and if wielded properly, can be used as a powerful lever to solve financial obstacles.
However, it does not come without reasons to choose other options. Many customers ask me, "Is the reverse mortgage okay for me. Am I making the right choice?"
I'm always a little taken back when they ask me this question. I mean, afterall, I make money only when the loan goes through my company. If I weren't an honest guy I may be inclined to promote my best interests.
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.
The reason is closing costs are quite high. If a reverse mortgage borrower sells the home within a short time frame it makes the cost of the loan, on an annualized basis, very expensive.
Since I do make money when a loan closes I prefer them to indicate they will be in the home until death. As the loan goes on through the years it becomes less and less expensive annually to the borrower.
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?
Here is your typical reverse mortgage customer... He plans on staying in the home at 3 years or longer. His income is fixed and can't change to meet his financial needs. The reverse mortgage makes sense for this man.
It is a viable financial tool, and if wielded properly, can be used as a powerful lever to solve financial obstacles.
However, it does not come without reasons to choose other options. Many customers ask me, "Is the reverse mortgage okay for me. Am I making the right choice?"
I'm always a little taken back when they ask me this question. I mean, afterall, I make money only when the loan goes through my company. If I weren't an honest guy I may be inclined to promote my best interests.
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.
The reason is closing costs are quite high. If a reverse mortgage borrower sells the home within a short time frame it makes the cost of the loan, on an annualized basis, very expensive.
Since I do make money when a loan closes I prefer them to indicate they will be in the home until death. As the loan goes on through the years it becomes less and less expensive annually to the borrower.
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?
Here is your typical reverse mortgage customer... He plans on staying in the home at 3 years or longer. His income is fixed and can't change to meet his financial needs. The reverse mortgage makes sense for this man.
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