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The Truth about Reverse Mortgages

I have never been a proponent of reverse mortgages for many reasons – and this article highlights them. (click here for artical)  Just had a client of Medford Financial Group contact me and I talked them out of a Reverse Mortgage and into a regular refinance, with cash out options.  Probably saved them $7,000 in costs, fees and interest – and with less aggravation and time.  That’s because before one can get a Reverse Mortgage they have to first go through counseling.  From start to finish it is about a 90 day process.

The two MAJOR reasons for a Reverse Mortgage, in my humble opinion are:

1.    The Client/person cannot get a regular mortgage and they want to stay in their home and not move into a care facility of any type and they do not have any other alternatives

2.    They need cash flow in order to survive.

NEITHER of these were the case for this client.  They have plenty of cash flow with pensions and SS – and they have combined over ONE MILLION in reserves – IRA’s – 401K’s and regular savings.  They could pay-off the $150,000 mtg if they wanted to – so there really was/is no need for a Reverse Mortgage

These are my two main reasons for referring one for a Reverse Mortgage – PERIOD!  Many lenders do not even do them, and I would NEVER recommend one of those celebrity TV ad sites.  I use a local bank – Fulton – where I use to work – because I know they care about the customer and the fees are reasonable – and if there is another loan type available, they will offer that option.  In the Medford Financial client case this was a scenario where their LENDER sold them on the Reverse Mortgage and they started the process of the counseling and found the fees to be excessive – in this case the Seniors used common sense – Hmmm – and called Brian and he called me and we saved them lots of money, time and aggravation.  Unfortunately this is not always the case and Seniors are often taken advantage of.   You might ask why their original lender did not do this – offer options.  Simple answer – sad but true – the mortgage originator makes a bigger commission on a Reverse Mortgage.

Please call or email with any questions.

Dennis Dovie

Dennis@paddencooper.com

609-953-1400

Artical: http://www.nasdaq.com/article/10-reasons-not-to-take-out-a-reverse-mortgage-cm427591