CNBC: Reverse Mortgages May Be Tempting, But Not For Everyone

With the addition of actor Tom Selleck to the list of reverse mortgage celebrity spokespeople, the product is appealing to many more people than it has in the past, but these loans aren’t for everyone, explains a recent article by CNBC.

“The onetime “Magnum P.I.” actor’s elevator pitch for reverse mortgage lender Americna Advisors Group sounds appealing: Use one of the most valuable assets you own — in this case, your house — to generate cash in retirement,” the article says. “Some financial advisors say it’s a tempting strategy but may not be right for everyone.”

Prime candidates for reverse mortgages are people who have paid off their mortgages before retirement, the article states. But this isn’t necessarily always true. There are plenty of homeowners who do still owe money on their home and can successfully complete a reverse mortgage without getting in over their heads.

Advertisement

Choosing the line of credit payment option over a lump sum is also recommended in the article, and using the line of credit when it is absolutely necessary to cover unexpected expenses. Above all though, anyone considering a reverse mortgage should talk to a qualified reverse mortgage specialist, the article says.

Read the full article on CNBC.

Written by Alana Stramowski

Join the Conversation (3)

see all

This is a professional community. Please use discretion when posting a comment.

  • The post above claims: “Above all though, anyone considering a reverse mortgage should talk to a qualified reverse mortgage specialist, the article says.” Yet the article does not say that at all. What it does say is the following: “But before you borrow, talk to a federally approved housing counselor who specializes in reverse mortgages.”

    So what the article states is the borrower should speak to a counselor, not an originator. Yet HECMs require it and the few other reverse mortgages being originated today generally require counseling as well. So what is the point?

    One almost wants to ask why give so much print space to the advice of a CFP if the article is not going to recommend seeking the advice of CFPs? Certainly that seems logical but as usual, reporters seem to miss the obvious.

    Even though the CFP showed how out of date he is with even the one year disbursements limitation rule, he still provided reasonably sound advice. Now some will want to criticize both the CFP and me for not mentioning the delay of Social Security benefits financed by a HECM strategy, the Standby HECM strategy, the Reversing Conventional Wisdom strategy of the Sacks brothers, etc. but such topics are far more limited in application than many seem to realize.

    Also such topics need development in establishing their actual benefits. For example one of the hardest topics to address with any real care for the senior is the benefits of delaying Social Security benefits when that delay is being financed by debt even a reverse mortgage.

  • The CBNC article supports the reverse mortgage in one way, yet discourages it in another.

    The need for a reverse mortgage is in the eye’s of the beholder. As Alana has pointed out, “There are plenty of homeowners who do still owe money on their home and can successfully complete a reverse mortgage without getting in over their heads”.

    This is very true, yet the article states the prime candidate for a reverse mortgage are those that own a home free & clear! This is deffinetley not always the case in the real world!

    The CNBC article is right in one sense, “It is not for everybody” but they also don’t give any real valid reasons as far as I am concerned. Yes, it may not be right for a couple that is deciding to sell their home within 2 years and they have no need for any funds, emergency or otherwise. It may not be for a couple that has a main goal of leaving their home free& clear for their one and only child. In short, there are reasons why one should not take out a reverse mortgage but I still don’t feel CNBC gave valid reasons!

    In short, everyone needs to make their own call on this one!

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

    • John,

      I know at least one senior with multiple real estate properties and hundreds of thousands in CDs, money market, and savings accounts who is in his late nineties. He is also at maximum social security benefit levels and has interest plus principal coming in from bond payouts. Why would he need a HECM?

      What about 62 year olds who have a history of poor gambling habits. As a societal matter, should they be encouraged to get a HECM? I know a few seniors in this situation.

      Then we have seniors who go without so that their lazy children can continue living in their excuses for not going out and finding work? I know a few seniors like that and refuse to discuss HECMs with them as well.

      Given time and sufficient space, the list above would not even be the tip of the iceberg.

string(104) "https://reversemortgagedaily.com/2016/08/14/cnbc-reverse-mortgages-may-be-tempting-but-not-for-everyone/"

Share your opinion