The Family Picnic
Has this ever had this happened to you?
You’re at a family gathering and someone mentions they’re thinking about getting a reverse mortgage.
Some family members may sheepishly excuse themselves – sensing the approach of a conversation they’d rather avoid. A few will say, “I’ve heard about those,” and may be open to hearing more, while others may be much more outspoken. Still others will have questions they won’t verbalize such as these:
“Did they lose their money to a poor investment? It must be pretty bad if it’s come to this.”
“I thought these things were for poor people who don’t have savings, and I know they have several hundred thousand dollars saved.”
“There goes the inheritance.”
Over the past two decades, I have heard similar concerns from many well-meaning clients, friends, and even financial professionals.
Here are a few other concerns people have expressed:
- Too Controversial: “They have a lot of bad press, and it seems that when they do come up, the response is always negative.”
- Too Complicated: “They have too many bells, whistles, and hid- den trap doors. I don’t know anyone who understands them.”
- Too Expensive: “I hear the costs can be high.”
- Not for My Clients: “Even if they did ask, my clients would never have a need for one.”
- Products That Should Only Be Used a Last Resort: “I would only tell my friend/client to do one if they ran out of money and it was the last possible option.”
There is no doubt that you have heard some of these concerns or had them yourself. Honestly, each of them has an element of truth. However, what you will discover is that the concerns on that list are either outdated, exaggerated, or misunderstood.
Four Simple Words
Over the years, I have discovered that sharing four words about reverse mortgages can help put everyone at ease:
IT’S JUST A MORTGAGE!
Here’s a fun quiz to help me illustrate.
One couple got a reverse mortgage and the other couple got a traditional home equity loan. Can you tell the difference?
Of course not, that’s the point. On the surface reverse mortgages share the same basic features as traditional loan products: you have a need, want a loan, produce documents to qualify, get approved, make payments, and call it a day!
To be certain, reverse mortgages do have some distinctive features we’ll discuss in this chapter, but underneath the surface, it’s just a mortgage!
This excerpt taken from Chapter 6 of The Retiree’s Guide to Housing Wealth | www.HousingWealthBook.com