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.
If I were going to place a ranking on how good the reverse mortgage is for customers I’d say it would be bad, okay, good, and great. People fit into all ranking. Let’s talk about great.
Closing costs are expensive for these mortgages. As such I’m very interested to know the time frame a senior plans on residing in the home.
Most important in my mind is to help my customer understand that their will be a fairly high cost to get the mortgage. My efforts are to ascertain the customers needs relative to cost.
Of all responses i prefer them to say something about being carried out in a box. From a reverse mortgage perspective, from the customer’s viewpoint, this is best as the cost to money gets less and less as the lengh of the mortgage extends.
When getting a reverse mortgage you will receive a disclosure which discusses how the costs reduce as the loan length increases.
You’ll see the loan at a number of different years down the pike. As it gets older you’ll see the annual loan cost get less.
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.
The fixed income customer actually makes up most reverse mortgages.
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.
Many have a mind set that they must leave something to the kids. It’s vital to them. The reverse mortgage is a financial tool that allows a mortgage without paying monthly. Interest tacks on to the mortgage which doesn’t normally give this group warm fuzzies.
To conclude we’re looking for three things: “they’re going to carry me out of the house”, non-recoverable financial hardship, and lack of desire to leave inheritance to the kids.
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