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Reverse Mortgages – Decision Making Tips

By Joffrey Long

Granada Hills, CA - Many borrowers contemplating a reverse mortgage have researched the program and are still left with questions. In addition, they’re getting all kinds of advice from friends, real estate people, and everyone else.

Here’s a simple way to organize the information, and help you make a decision. Where a homeowner going through this process may have many alternatives, all their choices really fall into one of four categories. I call them “The Big Four.”

Decision Making – Looking at “The Big Four” The idea here is to look at each of the following choices, and decide if it possibly works for you. Cross off the ones that don’t work, and narrow down your choices.

1. Do nothing. This means keep things the way they are. Assuming you have enough income, can afford repairs to the property as well as other needs, and you don’t have a strong desire for funds for other purposes, you might not really need a reverse mortgage at all.
2. Make payments. Instead of taking out a reverse mortgage, you could take out a regular loan that requires monthly payments to be made. There are some advantages to regular loans. Of course, you must qualify for the loan, and more important, be sure you can make all the required payments.
3. Sell the home. For some homeowners, selling the home may be their best choice. However, many homeowners who’ve lived in their homes 20 year, and sometimes longer, selling is the last thing they want to do. This of course, is the primary purpose of the reverse mortgage, to enable senior homeowners to stay in their homes.
4. Reverse mortgage. Since most alternatives other than a reverse mortgage will fit into one of the categories above, if none of the first three will work, then the reverse mortgage may be the right choice.

Many homeowners have found “The Big Four” to be very useful in narrowing down the choices and making the decision easier. HUD provides, through approved counseling agencies, free one hour counseling sessions to help homeowners determine if the reverse mortgage is right for them. You can attend one of these counseling sessions, even if you haven’t yet applied for a loan. Anyone having trouble deciding about a reverse mortgage may find the decision easier after meeting with the counselor.

Joffrey Long is the President of Southwestern Mortgage, a provider of reverse mortgages throughout California and in parts of Nevada. He’s the author of “Making Money with Reverse Mortgages,” and is also the President of the California Mortgage Association. He can be reached at (818) 635-1777 or at SouthwesternMortgage@socal.rr.com.