OakLeaves contributor Felecia Dechter writes that a consumer who took out a reverse mortgage a few years back told her how well it was working out a few years ago, helping her to pay bills and have a couple of extra bucks in her pocket. The sad thing is, when she called to talk about it, the woman now 91 could no longer remember the details.
Oak Park resident Doug Katz, a mortgage banker with Chicago Bancorp, highly recommends reverse mortgages. Katz directs the day-to-day mortgage sales operations of more than 25 branches for the company.
“Reverse mortgages are typically best for somebody trying to make up an income shortfall in retirement,” said Katz, in business since 2002. “I think a lot of seniors are on the ropes. Social security and pension aren’t getting them where they need to be. But they have equity in their property, and they can tap that equity to create income.”
There are criteria for a reverse mortgage. You have to be 62 plus, and have to have some equity. Your age determines how much you receive and how it’s paid out is determined by the borrower. The loan comes to an end when people hit limit, and the only time it has to be paid off is if the property is vacated.
Katz told Oak Leaves there is a huge amount of protection built into the product. “You can’t even take an application before people talk to a HUD-approved counselor. Not to say it’s riskless but it’s like anytime that you’re securing any debt. You have to figure out how it fits your financial structure.”