California Reverse Mortgages by your Sacramento Reverse Mortgage Provider

Another “Reverse Mortgage News Article” That Comes Close

by Jeffrey L. Bangerter
October 10th 2008

An article on National Consumer Law Center’s web site claims that a reverse mortgage “transaction is likely to be quite confusing” and “could also put a lot of your money in someone else’s pocket.”

Really, someone is going to get paid to work, what an outrage!

The article also says that on a $250,000 home the cost will be $25,000.

With a little bit of checking the writer of the article might have found that the FHA Mortgage Insurance Premium charged by the government is 2% of the home value up to the maximum lending limit for that county or $5,000.

The reverse mortgage loan origination fee is also currently 2% but going down in November 2008, but for now it is also $5,000.

The third party fees including appraisals, credit reports, title insurance and all the other fees add up to about $2,500 for a total of $12,500.

So they only missed the correct number by 100% but why be accurate when you can go for sensationalism!

Just to be fair if it is a Florida reverse mortgage loan then the state and local governments charge another $2,500 or so but they are still off by $10,000.

I don’t know how everyone else feels but it does bother me that news writers can just say anything they want and the heck with the facts.

By the way that cost comes out of your equity not out of your pocket so it is really just that much less you are leaving your heirs.

I also find it interesting that they don’t think a “senior citizen” can figure out if they want a monthly income, lump sum, line of credit or some of each.

Funny, the seniors I have helped knew exactly what they wanted when presented with the facts; don’t you think you could overcome such an apparently daunting task?

I am intrigued that they and others are so concerned about how much you may or may not leave your estate, how much of your money do you think your children deserve?

Is $25,000 each enough or do your children deserve $125,000 each? By the way what do you think your children will do with the money after you have died and left it to them?

From experience I can tell you they will spend it, they will have a new car and a trip planned before they finish with your final affairs.

Now in reality is a reverse mortgage going to eat up all of your equity? In most cases the answer is no, could it?

Sure if you take a lump sum of all that is available from the reverse mortgage loan and your home has no appreciation then it is possible.

I think the real question is who should enjoy this equity, you or your heirs?

On the positive side they do have a few good things to say and some good advice scattered in between the scare tactics.

Comparison shopping is a good idea and that is why we at WSB Mortgage Services, Inc. represent eight reverse mortgage lenders, margins change every week from lender to lender and we move our clients to the lender with the best rate at the time.

As far as their suggestion about using a Credit Union I think you will find most of them do not offer reverse mortgages.

I still wonder how they think taking a home equity loan is better than a reverse mortgage, a home equity loan will require payments and if you miss one the bank can foreclose on you and take your home.

With a reverse mortgage loan it is unlikely you will ever be foreclosed on as there are no payments to be made, just keep up on your taxes and insurance and maintain your property like you have always done.

The reverse mortgage is a non-recourse loan so you or your heirs will never owe more than the home is worth.

You will never be asked to make a payment or move out so this really is the safest loan you can get.

I do agree with them that you should not take the money from a reverse mortgage loan and invest it in something trying to get a higher return than what the lender is charging, you will do better to leave the equity in the credit line until you want it, that way it will grow and offer you access to even more money if and when you chose to use it.

I guess it helps that my company helps 200 to 300 people per year get a reverse mortgage, it gives us the expertise to explain how the reverse mortgage loan really works and it gives us the personal knowledge of what a positive difference it makes in the lives of our clients.

If you have a question call me personally I will be happy to answer any question and give you all the facts right over the phone.

I think with good complete information you can decide for yourself if the reverse mortgage is right for you.