5 Reverse Mortgage Issues You Didn't Know

Here's 5 Reverse Mortgage pitfalls your loan officer probably didn't tell you about.

Don't blame them. To be honest, your loan officer might not have known about them. Despite their 30 years in the business, they've probably never done a Reverse Mortgage. We're seeing many loan officers entering the field of Reverse Mortgages for the first time.

Here's your chance to teach your loan officer a thing or two...

1. Your Heirs cannot keep the Reverse Mortgage.
   If you pass away, the house now moves to your heirs, they'll need to refinance into a traditional loan. I have a client right now who's Mother left her home to her three grown children. While there is plenty of equity in the home, none of the three want to, or can, take on an additional mortgage at this time. They would like to sell but would rather wait until the market is better. They may not have a choice. Trusts, Probate and Living Wills also cloud the issue.

2. If you enter a Long Term Care Facility, you cannot keep the Reverse Mortgage.
   Your loan will become due and you will have to sell or refinance into a traditional loan. Having proper Long Term Care Insurance and financial planning can mitigate the effect of this. I know of a couple of Long Term Care specialists. They could write a book on the the devastating experiences they've seen. Talk to a specialist now. Want a referral?

3. Most Reverse Mortgages are adjustable.
   While we are just now seeing the beginning of fixed rate options, these are not your standard fixed rate loans and terms. Fixed or adjustable, your interest rate is going to typically be higher than that of a traditional mortgage. Of course on the bright side, you qualifying is very much easier!

4. Reverse Mortgages don't come free.
   Origination fees, mortgage insurance premiums, closing costs and a monthly service fees are all common. The overall and long term cost of any loan is critical. Don't focus on just the interest rate or just the origination fee. While all factors are important, the length of time you will keep this loan helps determine what loan is best for you. Find a Trusted Reverse Mortgage Professional.

5. A Reverse Mortgage can be considered income.
   More often than not it isn't, but be forewarned when applying to some governmental agencies and benefit programs. While this is not a usually the case, in some certain instances this may be a remote possibility. Proper care and counsel is always advised.

For some people a Reverse Mortgage can make enormous lifestyle differences. For some people a Reverse Mortgage is the best loan option. For others a Reverse Mortgage just doesn't fit or could be the worst choice they could make.

Do you know enough to make the right decision?