The Street: 7 Important Reverse Mortgage Questions

Finance experts weigh in on seven important questions potential applicants should ask themselves when considering a reverse mortgage in a recent The Street article.

Topics covered in their answers include who reverse mortgages are and are not best suited for, why counseling is mandatory, costs associated with a reverse mortgage and more.

Reverse mortgages are a good option for those who have the majority of their wealth tied up in their home, Bankrate.com senior financial analyst Greg McBride told The Street, adding that it’s not a good option for those who even after receiving money from a reverse mortgage would struggle to pay the bills.

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And while some retirees may forgo a reverse mortgage because of plans to give their home to their children, McBride told The Street, “As someone who has two retired parents, I don’t want their house – I want them to be comfortable and not worry about money.”

When considering the cost and payout of a reverse mortgage, Ben Simiskey, CPA and CEO of PLS Advisory, says potential borrowers should note there are closing costs associated, just as there are with a traditional forward mortgage.

“No matter where you turn for more information, do plenty of research,” Peter Bell, president and CEO of the National Reverse Mortgage Lenders Association, told The Street.

Read the full article at The Street.

Written by Cassandra Dowell

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  • We need to interview spouses after husband dies that had their income drop (in half) from $2500 to $1250 (loss of spouses social security check) and ask them if they planned correctly by not getting a Reverse Mortgage. Then we all need to look in mirror and ask will this spouse be able to run that home on a $1250 income when before the income was $2500………WE NEED TO GET ON SAME PAGE SOON..

    • Yo,

      You are really some kind of “Social Security sophisticate” but Social Security rarely is cut in half for the surviving spouse.

      When a spouse passes away and the length of the marriage meets Social Security requirements, the surviving spouse gets the higher of the two spouses’ benefits. For example, my father was getting over $1,800 per month when my mother passed away. Based on her separate Social Security earnings she would have received $600 per month but she got one-half of my father’s benefits since she made the right elections and thus received over $900 per month.

      Had either my mother or father passed away 10 years ago, the surviving spouse would have received $1,800 per month no matter what. That is 2/3rds of what the combined benefits my parents received not one-half. This is the case with most married couples who are both eligible for Social Security benefits.

      It is examples like yours which makes seniors leery of reverse mortgage originators. Seniors wonder if we do not understand simple Social Security issues which we use in illustrations how in the world do we really understand something as complex (in their minds) as HECMs. Sometimes it is better not to pretend to be an expert in things we really do not understand.

      • Cynic,

        Good advise, you did real good on this one, you deserve a great weekend for this:)
        Take care,

        John A. Smaldone

  • Cynic,

    You are running hot today, very good points you brought up on this comment. I thought I would ride on your coat tails today. It is Friday and I am to tired to make my own comments, beside, you are doing a great job with it today!

    John

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