Reverse Mortgage: How to make the right decision

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 By Alain Valles

Does it makes sense for you to get the newly improved, federally insured reverse mortgage? A decision like this can seem overwhelming. There are four important tips to help you make the very best informed decision.

Tip 1: Identify your financial and housing goals: What would be your ideal scenario if you obtained a reverse mortgage? Quite often, there is an immediate need for more cash each month or to pay off a mortgage and other debts. Other seniors are in financial balance today but fear outliving their savings or facing an unexpected health crisis.

In some cases, cash is desired to improve one’s lifestyle such as buying a car, taking a trip or a home improvement project. Find a quiet moment to reflect how you envision your life over the next 15 or 25 years — and beyond. For almost every individual, the goal is to be able to remain independent, afford to live in their home and enjoy a good quality of life.

Tip 2: Get the facts: There is much misinformation circulating about reverse mortgages. Many websites and TV infomercials are just methods to capture your name to be sold as a lead. The National Reverse Mortgage Lenders Association’s website (www.reversemortgage.org) is an excellent starting point to learn the truth about reverse mortgages. Another valuable resource is to speak with a Certified Reverse Mortgage Professional (CRMP). The CRMP is the industry’s highest professional designation and signifies someone who has passed a rigorous exam, a lengthy background check, abides by a stringent Code of Ethics and has significant experience.

One mandatory requirement of all reverse mortgages is that the borrower must complete an independent, government approved, non-profit reverse mortgage counseling session. The counselor’s job is to fully explain how a reverse mortgage works and make sure no one is taking advantage of a senior. Speaking with a counselor is an excellent way to get all the facts.

Tip 3: Talk with your trusted advisors: All reputable reverse mortgage companies will encourage you to invite your trusted advisors to be a part of the learning process. However, regardless if the advisor is a financial planner, an attorney or your adult child, very few people fully understand the pros and cons of obtaining a reverse mortgage.

What is recommended is to have the people you trust talk with the reverse mortgage specialist directly, rather than just giving a quick, possibly uninformed opinion about whether or not you should apply for a reverse mortgage.

Tip 4: Make a decision: Hoping things will magically get better usually results in more financial pain. Waiting might lead to regret, as the reverse mortgage program will soon be undergoing changes that will prevent many seniors from taking advantage of a reverse mortgage. For some people, deciding to sell a home and downsize or rent is a better choice. The key is to be proactive and seek accurate information in order to make the best decision for your life.

Alain Valles, president of Direct Finance Corp., was the first designated Certified Reverse Mortgage Professional in New England. Direct Finance employs more CRMPs than any other company in the country. He can be reached at 781-878-5626 x224, by email [email protected] or visit www.lifestyleimprovementloan.com. Archives of articles from previous issues can be found at www.fiftyplusadvocate.com.