Pros and Cons of Reverse Mortgages
The pros and cons of reverse mortgages have changed over the years. Originally conceived of as a financial rescue tool, the program has changed and has become a useful financial planning too. Many of these changes were designed to reduce the potential for fraud and misuse, and the reverse mortgage is now an excellent option for accessing your home equity. We sat down with Jackie Callaway and the ABC Action News Team to discuss the recent changes and the pro’s and con’s of the new reverse mortgage. They also interviewed a client of our’s who had this to say:
“I would highly recommend it,” said Joan Helmich, who was interviewed in the segment and who, along with her husband, settled on a reverse mortgage to help them with their monthly $2,000 house payment. “Just the equity that was in the house when it went into the reverse mortgage—it’s like a load off your shoulders, and it’s good.”
The reverse mortgage can seem complicated, and it’s important to understand the pros and cons of reverse mortgages before making a decision or signing an application. We highly recommend reviewing the information available to you on our Learning Resources page. One of the easiest ways to get a better understanding of how the reverse mortgage will work in your situation is to sit down with one of our licensed reverse mortgage experts. Access Reverse Mortgage Corporation has several Certified Reverse Mortgage Professional’s that are always ready to meet with you face to face to discuss your options.
When you are ready to find out how much you may be eligible to borrow visit our Reverse Mortgage Calculator for an instant quote!
Transcript of video:
Laura: ABC Action News is taking action for your parents all month long. Tonight we are examining a financial planning tool thousands of Baby Boomers rely on to supplement their incomes. But, are reverse mortgages really a good idea? Taking Action reporter, Jackie Callaway takes a look at the pros and cons.
Jackie: In simplest terms, a reverse mortgage works much like a mortgage.
Joan: I would highly recommend it.
Jackie: Bruce and Joan Helmich decided on a reverse mortgage for help with their $2000 a month house payment.
Joan: Just the equity that was in the house when it went into the reverse mortgage, it’s like a load off your shoulders and it’s good.
Jackie: The reverse mortgage’s reputation suffered hits over the years for high interest rates and sad stories of people who ended up worse off.
Mac: People who maybe were used to living more or less paycheck to paycheck all of a sudden had $100,000 or $200,000 in the bank. And there were some tragedies, obviously, when that happened.
Jackie: Mac Tennant, of Access Reverse Mortgage, says reverse mortgages have changed for the better. That includes mandatory counseling, no more lump sum payments, they’re capped now at 60% of loan value, and lower closing costs.
Mac: You’re going to borrow money using your house as collateral. You’ll get a statement in the mail each month. It will tell you how much you owe.
Jackie: You don’t pay the money back until you die or sell the place.
Joan: When we die, the house goes to the mortgage company.
Jackie: And while you may not have a mortgage payment, all other household bills, like taxes and insurance, are on the borrower. There are three options for payment. You can collect a large up front payment, a line of credit, or take monthly payments.
Joan: We just took it and paid off bills.
Jackie: You want to be very selective when it comes to choosing a lender for your reverse mortgage. We’ve got a list of every certified lender from Florida to California. Just go to our website. It’s abcactionnews.com, and then click on Taking Action. I’m Jackie Callaway, taking action for you.
These materials are not from HUD or FHA and were not approved by HUD or a government agency.