As a guy who specializes in reverse mortgage lending I obviously get many calls from would-be customers. I listen to their situations, ask questions, and arrive at conclusions.
I certainly don't tell all of them how great the reverse mortgage is for them. It's simply not a great option for all of them.
The reverse mortgage is a poor choice for some, 50/50 for some, good for some, and a great choice for the rest. I wish to tackle the latter group.
The thing I like to know is how long the borrower plans on being in the home. This is important because reverse mortgage closing costs are quite expensive.
What I'm trying to get at with my customer is if the cost to get the mortgage will be worth it to them. They have to understand that solving their financial issue will have a cost to it. Will the results be worth the costs?
The answer I like best from them is "until i die". This is best as the true cost of the mortgage, on an annualized basis, goes down the longer a customer stays in the home.
At loan application you would receive, from you lender of choice, a disclosure outlining how the mortgage reduces in cost, on an annualized basis, the longer the mortgage lasts.
The disclosure gives snapshots of the annual cost of the mortgage over various years. You'll see how cost reduces over time.
One other trait of the perfect reverse mortgage client would be one with a static income unable to pay current bills or medical. Additionally, it appears this income can't increase from family or some other source.
Fixed incomes play an important role in making up the perfect reverse mortgage customer.
I'd say the final attribute of the perfect candidate is that of not having a vital interest in leaving a large inheritance to the kids. This group is thinking about the rest of their own lives rather than the rest of their kids lives.
Some people are dead set on leaving as much as possible to the kids. Reverse mortgages rarely sit well with these folks because the interest is constantly working against the equity in the home.
So, we want 3 vital traits to come up with a perfect candidate: 1. Staying until death 2. Fixed income which doesn't cover their needs 3. The desire to use the equity of the home on their lives rather than their kid's lives.
I certainly don't tell all of them how great the reverse mortgage is for them. It's simply not a great option for all of them.
The reverse mortgage is a poor choice for some, 50/50 for some, good for some, and a great choice for the rest. I wish to tackle the latter group.
The thing I like to know is how long the borrower plans on being in the home. This is important because reverse mortgage closing costs are quite expensive.
What I'm trying to get at with my customer is if the cost to get the mortgage will be worth it to them. They have to understand that solving their financial issue will have a cost to it. Will the results be worth the costs?
The answer I like best from them is "until i die". This is best as the true cost of the mortgage, on an annualized basis, goes down the longer a customer stays in the home.
At loan application you would receive, from you lender of choice, a disclosure outlining how the mortgage reduces in cost, on an annualized basis, the longer the mortgage lasts.
The disclosure gives snapshots of the annual cost of the mortgage over various years. You'll see how cost reduces over time.
One other trait of the perfect reverse mortgage client would be one with a static income unable to pay current bills or medical. Additionally, it appears this income can't increase from family or some other source.
Fixed incomes play an important role in making up the perfect reverse mortgage customer.
I'd say the final attribute of the perfect candidate is that of not having a vital interest in leaving a large inheritance to the kids. This group is thinking about the rest of their own lives rather than the rest of their kids lives.
Some people are dead set on leaving as much as possible to the kids. Reverse mortgages rarely sit well with these folks because the interest is constantly working against the equity in the home.
So, we want 3 vital traits to come up with a perfect candidate: 1. Staying until death 2. Fixed income which doesn't cover their needs 3. The desire to use the equity of the home on their lives rather than their kid's lives.
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