IS A REVERSE MORTGAGE IN YOUR FUTURE?

REAL ESTATE – ELLEE CELLER, REALTOR –- For those of us who are eligible for a Reverse Mortgage (RM for short) it can be a good thing or a bad thing.  I have seen it played out both ways.

GOOD: If you have a small mortgage and plenty of equity in your home, if you plan to live in your home for the remaining years of your life, and if you don’t mind reducing what you give to your heirs, it is a perfect opportunity to provide liquidity.

BAD: If on the other hand, you are mortgage heavy (perhaps less than 50% but close), may be only able to remain in your home for a couple years, and would rather have your equity for your heirs, such as it is, it is not a good choice.

As a Realtor I have sold several homes under the old Reverse Mortgage.  The homes are sold by the bank which issued the RM because there is no equity left for the heirs, the homes have deferred maintenance and heirs had no interest in owning the property.

The new RM rules have added mandatory PMI which is 2.5% of the initial value of the home and 1.5% annually through the life of the loan.  This protects the bank. The fees for the RM are high, which depending on the equity existing, would be amortized over at least two years and perhaps 4 or 5 to pencil out.

Finally, there are good and bad loan officers doing RMs.  Make sure you find a good one.  Personally I have worked with Matt Allen of Pacific Residential Mortgage in Medford, Oregon.

He does RMs exclusively.  He is straight talking, very knowledgeable, and someone I think has the whole picture.  Many loan officers are not thoroughly educated on RMs and are attracted to the high fees and commissions they could receive. Caveat Emptor! Here’s more information for an excellent real estate information site:

http://rismedia.com/2016-01-23/reverse-mortgage-and-your-adult-children/?utm_source=newsletter&utm_medium=email&utm_campaign=eNews

 

 

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