CBS: Give Reverse Mortgages Another Look

NewImage.jpgCBS Money Watch columnist Jane Bryant Quinn tells readers that “if you’ve been snubbing a reverse mortgage, or counseling your elderly parents against it, take another look. These notoriously expensive loans are now on sale for less.”

Quinn says that while the loans get plenty of press about being mis-sold, at the right time, reverse mortgages can help those living a pinched life of living on Social Security and measly certificates of deposit.  Specifically, Quinn encourages seniors to take a look at the HECM Saver to fill short term needs.

“A Saver credit line is a good way of improving your cash flow while you’re waiting to sell your house. When the housing market improves, you can repay your loan and downsize into something smaller. A reverse mortgage could also help you hold off foreclosure while you find another place to live.”

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Peter Bell, President of the National Reverse Mortgage Lender Association talks to her about the new HECM Saver too.

4 Reasons Why You Should Give Reverse Mortgages Another Look

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  • Jane is clearly well versed on reverse mortgages but still shows her lack of familiarity. She claims that there are no credit checks which is not quite the case. She also confuses the idea of nonrecourse with FHA insurance. Jane claims that the origination fee on a Saver is lower than on a Standard.

    Where Jane does good is advising seniors that getting a reverse mortgage too early could be a poor decision but what she fails to discuss is cash management versus reduced equity. Some will find that continuing to pay mortgages could leave them bereft of the cash they need later on due to the payment of interest. Other issues borrowers should consider before deciding to wait until they are older is if lending limits could be reduced and expected interest rates could rise further eroding needed cash.

    The article was a mixed bag. It was definitely written through her own eyes and not much more.

    What was best about the article was her call for seniors and caregivers to revisit reverse mortgages.

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