No Statistics Provider Proves That Reverse Mortgage Market Works
There is one damper we’d like to put on the enthusiasm of seniors who want to take a reverse mortgage loan without waiting.
There are no known statistics providers that can prove that revere mortgages work. There are only some known facts about reverse mortgages that any senior with common sense should know about. At the end of this article, you should know if reverse mortgages are going to work for you. As well as what works and what does not work with this loan program.
• There is nothing mysterious about how the reverse mortgage market works.
A typical reverse mortgage program works this way: (A) you go to a reverse mortgage counselor who will tell you the facts and statistics about this particular loan program. (B) When you are done with the counseling, you will apply for a reverse mortgage loan with any reverse mortgage loan lender that is accredited by the US Department of Housing and Urban Development. (C) You will get the money through a lump sum amount, periodic cash payments, credit line (or combinations of these payout methods). (D) You spend the money. (E) After you die or sell your house then the reverse mortgage loan is repaid from the sale proceeds of the home. That is a simple explanation of how a reverse mortgage works.
• Statistics prove that it is not all about being poor.
Originally the reverse mortgage program was built to help cash strapped seniors (who are at least 62 years old) with their living expenses. There are also a significant number of seniors who take out a reverse mortgage loan to splurge on life – vacation, premium items, etc. There are also seniors who use this loan instrument to plan their estate (to bequeath money to their heirs). So don’t pity yourself if you take out a reverse mortgage loan.
• Statistics also prove that you can pay a lot in fees.
It is a good thing that you will only pay for your reverse mortgage loan when your home has already been sold or refinanced. However, you should know that reverse mortgage have upfront fees and costs that are very high. With one reverse mortgage program, you need to pay 2% of the amount as insurance premium. There is also a 2% origination fee on top of the closing costs.
• Beware from the marketing of reverse mortgage providers.
Do not be easily swayed by the marketing hype about reverse mortgages, especially if a mortgage provider is doing the marketing. Smart consumers know that a product’s marketing is only as good as its substance. Know everything there is to know about reverse mortgages (all information can be obtained for free from HUD the Department of Housing and Urban Development). When you’re reasonably armed with information and are ready to face reverse mortgage providers, be wary of their salespeople. You might be persuaded to invest the loan proceeds to some pricey financial product just so they could earn their commissions. Before taking out a reverse mortgage loan, it helps to enlist the help of a lawyer you trust.