California Reverse Mortgages by your Sacramento Reverse Mortgage Provider

Reverse Mortgage aren't for Everyone?

by Zachary Scott
September 9th, 2008

I hear and read that the Reverse Mortgage loan is not for everyone and this may or may not be true, but usually all the bad press about the Reverse Mortgage Loan are associated with the word annuities.

I believe that annuities have a place in a persons financial or retirement plan along with long term care insurance, life insurance and other financial tools.

I also believe that the FHA Reverse Mortgage Loan has a place in a persons financial or retirement plan the same as the traditional mortgage has or had a place earlier in the seniors life.

With that said the HUD Reverse Mortgage is not the problem, the problem arises when you use the Reverse Mortgage to get the money to put into an annuity with the intent to make an interest arbitrage.

Annuities are a tool, good or bad that ties up a persons money for a period of time for a rate of return.

The Reverse Mortgage is a tool, good or bad that frees up a persons equity/money in a dormant asset their home.

So to free up your money(using the reverse mortgage) just to tie it up (in an annuity) again really doesn’t make much sense.

It may make sense if the markets never go down but history has proven that markets can and do go down.

The protection of the asset from disaster/loss could make sense, but that’s another story.

The point is if you need or want money in your retirement for anything, use your imagination, and you are looking to borrow the money the Reverse Mortgage makes the most sense. (no monthly payments)

I have had retired clients that have wanted to do the reverse mortgage (Borrow money at say 5%) and invest in an annuity (get a return of 12%) thus making a profit of 7%.

Because of their need for money, retired senior clients tend to fall for that scenario.

It is so enticing to both the retired client and the reverse mortgage loan officer, congress had to pass laws against any reverse mortgage loan officers from offering or referring annuities or other financial products to their retired senior clients.

The Reverse Mortgage Loan was not established to make speculators out of our senior population.

The Reverse Mortgage Program was established to assist retired seniors at a time in their life’s when they may be living on a fixed income the right to tap into one of their biggest assets, their home, for any financial needs or wants they may have.

This does not mean the products aren’t for everyone, just everyone needs to use them wisely.

Let use at WSB show you how to use one of your largest assets wisely, start by getting a free reverse mortgage quote on the right side of this page.