It's better than letting the government seize your home and throw you out in the street because you didn't pay your property taxes.
The only money flowing into a reverse mortgage company is brought by the old people walking in the door. The fat salary of the RM president, and salaries of all employees are paid by the persons seeking financial help in their golden years. It doesn't take a rocket scientist to figure out that the average retiree walking in the door is going to lose money. How is this any different from going to Las Vegas to supplement your retirement income? At least the Las Vegas tourists know they will likely leave with less than they brought, and will have fun giving their money away.
Last edited by Peter1469; 11-23-2014 at 07:16 PM.
ΜOΛΩΝ ΛΑΒΕ
I was in the mortgage biz for years, and sold three reverse mortgages. And they were a lifesaver for my clients.
People forget that your existing mortgage gets paid off! That greatly improves your cash flow each month. And the recipient must talk with a licensed HUD mortgage counselor before proceeding, to make sure they know what they are getting into. The heirs can get the home simply by paying off what the RM balance is; no different than a forward mortgage in that respect. And the borrower can take out a term life insurance policy tp guarantee the payoff of the RM, whatever amount that may be.
And many folks smooth over the kids, by buying them a car, or making a down payment on a new house, or a college fund set up. And many folks use the credit line feature to gain about 4% on their money, much better than a CD account.
I had a lady who owned a big antique store and was in arrears, and she was in arrears on her property taxes, and about to lose her home, plus she was behind on her mortgage payments as well. Voila! The RM saved her, her store, and her home!
About the only way you can lose your home with the RM, is if you don't make your property taxes, or keep up the repairs on your home. The shady characters have been eliminated from the business. Realtors hate the RM, because they want the seniors to sell their home, and downsize to buy another home.
Reverse mortgage is for seniors who love their home and want to keep it the rest of their lives.
You can actually buy a home with the RM, few folks realize that!
Equity is like a big pot of gold buried in your backyard, but you don't know where it is.
It doesn't do you any good, has no return, unless you use it. The only way you can use it is when you sell your home for a profit, or do a reverse mortgage.
I used to ask prospects; "How much did your earn off your equity last year?" Puzzled, they go, nothing. See, that's what I mean.
Peter1469 (11-23-2014)