A reverse mortgage can be a “blessing” when considered carefully, writes Bernice Ross in an Inman News article this week. There are several cautions to look out for, she writes, such as removing a borrower from the home title or taking a lump sum payment without the forethought for how the money will be used.
Ross, a Realtor trainer, also details a scenario in which one of her clients is planning to use a reverse mortgage toward a four-unit building that will gain income through units for rent in order to pay back the reverse mortgage.
The three “must-knows” noted are to find a reputable lender, to be wary of a lump sum payment option and to be cautious in cases where only one spouse is on the home title.
There are a few points in the article that need to be based on more accurate information. For example, Ross states that FHA/HUD is a reputable lender. In fact, FHA does not lend, but rather insures Home Equity Conversion Mortgages (HECMs), as any lender in the business knows. She also points readers to the Federal Trade Commission’s website for more information when HUD is a better resource.
There have been recent initiatives on the part of the industry to educate Realtors on reverse mortgage products. Interestingly, Ross does not go into detail about the Reverse Mortgage Purchase product, which lends itself most closely to the role of Realtors in the home sale process.
Written by Elizabeth Ecker