Reverse Mortgages – Questions to Consider

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I will admit it upfront – I have not reviewed the changes to the Reverse Mortgage market since the government and companies adjusted the various programs offered to the public.

I do know though that the program has changed to make the cost structure more flexible for those taking out a home loan or a reverse mortgage from reliable mortgage services – however, no one likes to lose money so let’s begin with the premise that these products must be profitable, on the average, to the lending company. This holds true for other shared-risk businesses by the way, such as insurance.

Over the years, I have put together a list of simple questions I ask those who are considering a reverse mortgage. Here are a few:

1. Do you own the home outright, or is there a loan/lien on it?

2. How much in cash/investments do you have: banks, mutual funds, retirement accounts, cash value in life insurance, etc?

3. Would you consider selling your home or are you only leaving feet first?

4. What is your income? Are you experiencing a large or small shortfall in income vs expenses? (if it’s small, there are other options to consider such as property tax deferral in some cities and towns)

5. Is it important that you leave an inheritance to someone?

Start your thinking with these questions – there are others to ask but if you’re wondering what you should consider when pondering a reverse mortgage, give these questions a try.

Do you have comments or thoughts? Please share.

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