Reverse Mortgage Information Center

1. Getting a Reverse Loan for the Purpose of a Short Term Fix.

In instances where foreclosure is imminent, or repairs are needed to maintain habitability, for example, would be reasons to use a reverse mortgage short term. But as a general rule, you should consider a reverse mortgage as a long term solution. When you consider the fees that are associated with a reverse mortgage against the need for the money, you should be able to determine if it makes sense for you with the help of a trusted loan officer.

2. A Reverse Mortgage Can Affect Your Government Benefits.

Not really because of getting a Reverse Loan, but because of the impact it can have on your finances. The program we are specifically speaking of is Medicaid. If you have too much money in reserve, you can be disqualified. The way this can happen is by taking a lump sum of money that is needed for something like home repairs, but you put in your bank account first. If you don’t spend it when the new month rolls around, you could cost your Medicaid eligibility. Another way is if you take a monthly allotment and don’t spend it all each month. This will be a savings that long term could equal enough money in your bank account to disqualify you.

3. Doing Your Reverse Mortgage Through a New or Inexperienced Loan Officer.

It may be hard to believe, but bank loan officers don’t have to be licensed or trained to the States standards. On the other hand, mortgage brokers have very strict criteria set by the State to be allowed to do loans for the public. Virtually anyone can be a loan officer at a bank and experience is not necessarily a requirement. You could walk into a bank, apply for the job, and be taking applications in a very short period of time. It may be a bit biased, but I would prefer to deal with someone that is a trained professional, one that is licensed and can be held accountable to the State. Since the commission that a loan officer earns can be pretty high, it can tempt the younger, less experienced ones to overcharge in the hopes of making a big payday.

4. Avoiding a Reverse Mortgage Loan Because of Fear of the Unknown.

There are so many people afraid of a reverse mortgage for no other reason than they just don’t know who to trust. The facts seem too good to be true, so they shy away. What I would like to show is how to know what is true and how to make a smart decision. First off, there are too many “experts” in a field that they know nothing about. The amount of disinformation is almost overwhelming, even for someone who knows the truth. I have seen financial planners who will state that you lose your home when you do a reverse mortgage. I have heard several people say that you will leave excessive debt to your heirs. So here is a little advice that may soothe your concerns: First, try to find a loan officer that you feel you can trust. If you have an uncomfortable feeling about the loan officer, you should probably find someone else. You are not tied to the first person you talk to. Second, don’t listen to the advice of everyone out there. There is a great article (if I say so myself) called “Bad Advice From Good People about Reverse Mortgages”. Check it out if you want to see an article about how to qualify the person giving you the advice. The gist of it is; see if the person you’re seeking advice from actually knows anything. In the example above, the financial planner may be a genius about retirement money, but probably has never originated a loan. If you ask your kids for advice, which is strongly recommended, make sure they know what they are talking about. If they are not qualified to advise, have them attend your meeting with the loan officer. This also applies to you. I have seen people disqualify themselves because they don’t think they qualify. The best advice here is to ask a true professional in the field.

5. Moving Too Quickly During the Reverse Loan Loan Process.

It only takes about 10 minutes to teach you everything you need to know on a reverse Loan. But you will probably have questions that will make you more comfortable when you get the answers. Sometimes these questions take a little time to formulate, so don’t let your loan officer rush you into making a decision. Don’t mistake doing your loan quickly with pushing you to make up your mind in a hurry. Once you have determined you want a reverse mortgage, the process should be fairly quick. It will take about a month to a month and a half to get your loan closed.

6. Thinking That Being Older Will Get You More Money.

Bonus mistake: I know I said five, but this one came up while typing this. Waiting until you’re older is not always the best option. With rates being so low and terms being so good, it probably makes more sense to do the loan now rather than later. This is because adding another year or two to your age will get you a little more money. But, if the interest rates go up just a half of a percent, it could make thousands of dollars difference. The point is; Lower rates trump age, assuming all potential borrowers are at least 62 years old.

See more articles and blogs at Redwood Reverse Mortgage. David Prulhiere owns Redwood Financial Services and specializes in reverse mortgage education and loans.