Motley Fool: 4 Considerations for Reverse Mortgages

Reverse mortgages can help eligible older Americans generate additional revenue in retirement, but there are important details consumers should consider.

Potential borrowers should be wary of signing on the dotted line until they receive reverse mortgage advice, says The Motley Fool in a recent article.

“The best reverse mortgage advice doesn’t typically come from the banks that are trying to sell you on their reverse mortgage package,” writes Michael Lazar. “Rather, it comes from third-party sources that don’t earn an interest rate and profit off a packaged loan.”


For those considering a reverse mortgage, The Motley Fool suggests borrowers know their options, know the risks, understand it’s a big decision, and seek independent reverse mortgage advice.

“Be aware that there are risks involved when taking on any type of debt, including a reverse mortgage,” Lazar writes.
For example, if the home is sold then the loan is due immediately, including associated compounded interest. In addition, taking the lump-sum benefit may affect eligibility for programs like Medicaid, he notes.

Read the article here.

Written by Cassandra Dowel

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  • Here we go with delusion once again.

    How does a reverse mortgage generate “revenue” to borrowers? This irrational choice of a word as a synonym for proceeds and cash shows how undereducated members of our industry actually are and how poor our education of others really is.

    Even the Motley Fool starts off right in the first sentence of its linked article when it says: “…the reverse mortgage is a viable option that can put some cash into their hands quickly….”

    What a reverse mortgage generates for the mortgagor is an ASSET called cash (sometimes referred to as proceeds depending on the context and subject matter) or available cash. Neither income nor revenue are assets. Both are temporary subcategories of equity. They describe ways that equity grows; they are not the same as cash.

    (The opinions expressed in this comment are not necessarily those of RMS or its affiliates.)

  • The Motley Fool brings light (clouds and darkness) to the subject of selecting a counselor that will keep you talking to yourself for a few minutes if not weeks: “Avoid counselors who are recommended by the bank. Instead, research independent counselors who don’t work for, or with, any banks.” Now while that might be helpful with some proprietary reverse mortgages, the vast majority of reverse mortgages being originated today are HECMs. So the independence standard for counselors foisted on seniors by Motley Fool is any counselor recommended to the borrower by the lender; will wisdom never cease (LOL)? Besides all of that, banks are no longer the dominant entities originating HECMs today.

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