Reverse Mortgage Money Now Accessed for Investments
I don't suppose I need to tell you that we've lost somewhere around thirty five percent in value in the stock market in one year. Some seniors are now picking up their phone and calling me because of this.
They are looking to get a reverse mortgage. Of course the planets have to match up to their particular situation for me to entertain this with them.
What I like to see, first and foremost, in my potential customers is the attitude that they will be in that house until death do the two part. The reason is the closing costs make getting a reverse mortgage pretty expensive in the short run.
The longer one holds a reverse mortgage, or in a practical sense, stays in the home the cheaper the mortgage becomes on an annualized basis.
What some of these folks are wanting is to use proceeds to invest either back in the market or into other investments outside the market.
One of the teasers the reverse mortgage has for these folks right now is very low interest rates on the adjustable rate option.
As of this week the ARM is just under four percent. In the short run this makes this loan pretty nice. In the longer run it's average is in the six percent range.
As a loan officer I'm not required to represent my customer's best interests. However, as an ethical person I do my best to discuss the costs as opposed to the return the customer will receive by investing reverse mortgage money.
In my conversations with the borrower I always discuss the fact that rates will not continue at their current position indefinately. They will go back up.
Many in the marketplace are taking the position that rates will be low for some time with so much pressure to keep them low.
When rates are high it is difficult for big business to borrow. This is hardly ever good, especially when the economy is in such bad shape as it is now.
I have no doubt rates will be down for some time, but it I have to wonder how much some of these borrowers are thinking through the costs as opposed to the benefits.
People must consider not only the interest rate but also the closing costs when factoring the true math to determine if this is really a good idea.
They are looking to get a reverse mortgage. Of course the planets have to match up to their particular situation for me to entertain this with them.
What I like to see, first and foremost, in my potential customers is the attitude that they will be in that house until death do the two part. The reason is the closing costs make getting a reverse mortgage pretty expensive in the short run.
The longer one holds a reverse mortgage, or in a practical sense, stays in the home the cheaper the mortgage becomes on an annualized basis.
What some of these folks are wanting is to use proceeds to invest either back in the market or into other investments outside the market.
One of the teasers the reverse mortgage has for these folks right now is very low interest rates on the adjustable rate option.
As of this week the ARM is just under four percent. In the short run this makes this loan pretty nice. In the longer run it's average is in the six percent range.
As a loan officer I'm not required to represent my customer's best interests. However, as an ethical person I do my best to discuss the costs as opposed to the return the customer will receive by investing reverse mortgage money.
In my conversations with the borrower I always discuss the fact that rates will not continue at their current position indefinately. They will go back up.
Many in the marketplace are taking the position that rates will be low for some time with so much pressure to keep them low.
When rates are high it is difficult for big business to borrow. This is hardly ever good, especially when the economy is in such bad shape as it is now.
I have no doubt rates will be down for some time, but it I have to wonder how much some of these borrowers are thinking through the costs as opposed to the benefits.
People must consider not only the interest rate but also the closing costs when factoring the true math to determine if this is really a good idea.
posted by Debt Consolidation Loan at
10:42 PM
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