AARP Comments on Reverse Mortgages

AARP offers lots of information on Reverse Mortgages, however, some of my
clients have found that information confusing.  We have dealt with this issue by simply going over the client’s personal situation, and analyzing ALL the factors that need to be considered when choosing a Reverse Mortgage:

• The age of the borrowers
• The amount of equity in the property
• The current financial situation of the clients – will a Reverse Mortgage be of benefit or is it simply a “cushion?”  If it is a cushion, what are the reasons?  (Often there are many GOOD reasons for having a cushion before you need it and in fact, having that cushion in some cases can become a life saver.)
• Review of the amortization schedule and realistically analyzing the assumptions made on that schedule: 
  1.)  Is it realistic to assume the annual appreciation projected?
  2.)  Are the draws reflected realistic? 
  3.)  Projected interest rates?  While these are based on historical data from either the CMT or the LIBOR, what if that historical data is not an indicator of the future?  How can you know?
• The client’s overall situation — are there health care issues, or long term care possibilities down the road?  If there are two spouses, and one is widowed, can he/she make it based on the Reverse Mortgage projections?As you can see, many of these areas are suppositions – but the more you examine ALL the ins and outs of a Reverse Mortgage, the more clear you can become about whether it is right for you or your loved ones.I recommend RESEARCH, RESEARCH, RESEARCH — and get advice from those you trust.

READ AARP ARTICLE BELOW:

Should you take a reverse mortgage? Deciding whether to take a reverse mortgage should be compared to selling your house and finding a cheaper place to live, according to the AARP. Questions to consider: • How much money can you get by selling your house and paying off any existing mortgage? How does that compare with the reverse mortgage? • What would it cost you to buy or rent another house or apartment? • How much money could you earn on anything left from selling your old house after you buy a new house? • Have you considered all the alternatives that may be appropriate? These may include buying a less costly house or condo, renting an apartment or moving into assisted living. Source: AARP