Making Sense of Reverse Mortgages Information you need to make a good decision!

October 16, 2013

Nightmares are no longer available

Filed under: Uncategorized — Scott Larson @ 9:32 am

My brother brought an article to my attention about a reverse mortgage that was a nightmare situation for a family in New York.  This loan, done in 1997 (16 years ago) truly was a nightmare with two extremely costly provisions, a 50/50 equity share, and a required purchase of an annuity.

So first off… THIS IS ILLEGALhas been for years!

But take a look at the article, this is what can happen when you are dealing with unscrupulous people that are more interested in the money than the senior.

My irritation with the article, at least the main one… well one of the main ones… is near the end;

Reverse mortgages, even today’s friendlier versions that offer upfront counseling, can be hazardous to elderly borrowers’ financial health and potentially costly for their heirs.

Getting old is hazardous to a seniors financial health…  you have to buy things… like food, or prescriptions,  or pay taxes.  Any bill is “hazardous” when you don’t have additional income coming in.

and, yes… reverse mortgages can be costly… but let’s compare a reverse mortgage in the “real world…  Mortgages are costly… selling a home is costly… getting in-home care is costly…

And finally, we should not be worrying about the heirs.  Let the heirs fend for themselves!  And please… Don’t hear what I am not saying... I am not saying that we should not try to preserve the seniors estate… what I am saying is that the senior should use their own money for their own benefit first.  They worked for it, they earned it, they should use it if they need it!

My other irritation is… whoever sold these products should be prosecuted to the full extent of the law!   I am not absolving the senior, and their family from responsibility – I have never seen a mortgage signed by accident – but this is another reason you should fully investigate the people that you are working with.

And finally the conclusions

Just as a car build in 1997 is not as good as a current one, a 1997 reverse is not the same as one that is being offered now.  Protections and regulations have made this a much better option – Not for everyone to be sure – but a good option when it is appropriate.  It is a financial tool.  Just like a hammer that can be used to build a house, or to commit a murder, when it is appropriate it is a good thing.

And finally… use someone you trust.  if it is me, great, if it sis someone else, great – but make sure that the person know what they are talking about and don’t push you to make a decision.  Also make sure that your friends, family, attorney, financial planner – someone you trust in your life is helping you.  if the reverse mortgage rep does not want to talk with them, answer their questions, find another rep!

 

 

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