HuffPost: Take a Reverse Mortgage Now or Later?

Deciding when to take a reverse mortgage can pose several advantages as well as disadvantages for the senior borrower, particularly when weighing the possibility of future home price increases and rising interest rates, according to a recent Huffington Post article.

Unlike a forward mortgage, where a prospective home buyer is pressured to make a purchase and have their mortgage approved and fully processed before the sale date, a senior contemplating a reverse mortgage isn’t necessarily “under the gun” and can deliberate as carefully as they want, writes Jack Guttentag, also known as The Mortgage Professor, in a recent article that was published by the HuffPost last week.

“Having the opportunity to consider all options without feeling pressured is a good thing,” Guttentag writes. “But it can be a bad thing if the conditions that affect the terms of the reverse mortgage for which they qualify change in an unfavorable way while they are waiting.”

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Considering a homeowner who is age 62 with a home worth $200,000 and no existing mortgage, Guttentag posits several scenarios to illustrate the impact of delaying a reverse mortgage, and how external forces such as rising interest rates and home value appreciation fit into the equation.

“It might be prudent for seniors on the fence regarding whether they want a reverse mortgage or not to engage in watchful waiting,” he writes. “But for those who realize that a reverse mortgage will substantially enhance their lifestyle, watchful waiting is procrastination that could cost them dearly.”

Read more at the Huffington Post.

Written by Jason Oliva

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  • The article comes out with some good points but taking out a reverse mortgage should never hinge upon whether or not external forces such as rising interest rates and home value appreciation should be part of the decision to go forward or not!

    The need is what is important, gambling on appreciation of home values or interest rate fluctuations can never be predicted in a volatile and unstable world economic and hostile environment that we are in today!

    The need is always the number one factor, if it fits the need or desire of today, go for it, don’t gamble on what may never happen!

    John A. Smaldone
    http://www.hanover-financial.com

    • John,

      “…but taking out a reverse mortgage should never hinge upon whether or not external forces such as rising interest rates and home value appreciation should be part of the decision to go forward or not!”

      “Never” is more an exclamation of emotion than a word selected with great deliberation.

      “…gambling on appreciation of home values or interest rate fluctuations can never be predicted in a volatile and unstable world economic and hostile environment that we are in today!” What is so volatile today? Have interest rates moved much in the last few years? Home values in many areas of the country are still going up.

      There is no question that when someone qualifies in a volatile LIBOR interest rate market or home appreciation market, waiting could be harmful. Since all real estate is local, home appreciation needs to be viewed at a local level while LIBOR interest rates are international.

      The name of our game is tracking the markets in relationship to our prospects’ views and helping them to understand that the optimum moment cannot be predicted and unless there is a positive anticipated change that can be relied upon in the near future, waiting can be detrimental and many times is.

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