If you do a little bit of research on reverse mortgages, you will notice that everyone talks about reverse mortgages "making sense" or "they are not for everyone". How do you know if a reverse makes sense for you or your parents (or clients)? One way is to find out how others have used reverse mortgages and ask them how their lives have been since then.
Finding negative stories abour reverse mortgages is easy, but I want to show you some stories where a reverse mortgage has changed the lives of retired homeowners for the best. You'll have to do a little work to find the stories, as they're not mine and not made up. They are located at the NRMLA Reverse Mortgage website. On the Borrower Profiles page - http://www.reversemortgage.org/BorrowerProfiles/tabid/238/Default.aspx
You will find stories there of homeowners who opted to get a reverse mortgage for varying different reasons.
- Adding a Ground Floor Addition
- Paying off Debts
- Funding In Home Care
- Avoiding Foreclosure
I have also seen homeowners use a reverse to access funds to purchase additional real estate, for themselves or their family.
For the right reasons, with education on all of the pros and cons of a reverse mortgage, they can be a great tool.
Finding negative articles about reverse mortgages is easy, and with a little investigating it usually a story of the borrowers taking the funds from the reverse and investing them unwisely (often due to an unscrupulous lender or salesperson). A recent story features an adult child who has been living (rent free) for over a year in the home since the senior passed away and is just now facing foreclosure.
Remember, Reverse Mortgages are Non Recourse Loans, insured by FHA and only the home itself is liable for repayment of the loan. The heirs would never be responsible for any shortage. If the home cannot sell for the balance due, then too bad for the lender, they will have to go to FHA for payment of a claim againts the Mortgage Insurance that was purchased at the time of the loan origination. (Realtors - You will be familiar with this language as it is just like the FHA guarantee on traditional mortgages)
Please do check out the website of NRMLA, they are a great organization and I recommend that you check with them about any reverse mortgage provider you are thinking of doing business with.
I will add this link to my "links" section of my blog. By the way, there are some great links there for anyone looking for unbiased, factual information about reverse mortgages!
Thank you for reading! Please share your thoughts, comments and concerns.
By Deborah Nance
Your Local Southern California Reverse Mortgage Professional
Click the Learn More Button below to email me a question.
iReverse Home Loans, LLC, NMLS#810502 originates reverse mortgages in Alabama, Alaska, Arizona (MB-0919584), California, Colorado, Connecticut, Florida, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oregon (ML-5378), Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont (1164-MB), Virginia, Washington and Wisconsin.
Important Information: Reverse Mortgages are neither "endorsed" nor "approved" by the Federal Government. The FHA (Federal Housing Administration) provides certain insurance benefits for lenders and borrowers in connection with the lender’s HECM loans; the FHA does not make or originate loans. The owner(s) retain title to the property that is the subject of the reverse mortgage until the person sells or transfers the property and is therefore responsible for paying property taxes, insurance, maintenance and related taxes. Failing to pay these amounts or failure to maintain the condition of your property may cause the reverse mortgage loan to become due immediately. A reverse mortgage is a complex loan secured by your home. Whether such mortgage makes sense for you depends on your financial situation and needs. For these reasons, we strongly recommend that you consult with a qualified independent housing counselor, family members and other trusted advisers before making this decision. This website is not from HUD or FHA and was not approved by HUD or any government agency.