I don't suppose I need to tell you that we've lost somewhere around thirty five percent in value in the stock market in one year. Some seniors are now picking up their phone and calling me because of this.
What they want is to tap into the equity in their home with a reverse mortgage. I'm not one of those loan officers that believe a reverse mortgage is good for everyone. It's not.
When evaluating whether a reverse mortgage is the proper financial tool for any individual or couple I look at how long the borrower plans on staying in the home. This is important as the cost to obtain the mortgage are costly for short term reverse mortgages.
Generally, we determine the cost of the loan on an annualized basis. The longer a borrower lives in the home the cheaper the loan actually becomes over time.
As some of the these phone calls are losing tons of their hard earned money they are calling to to pull money out of their equity to reinvest in other investments to recoup their losses.
One of the teasers the reverse mortgage has for these folks right now is very low interest rates on the adjustable rate option.
Currently it's below 4% which makes this a fairly attractive option. Of course this rate is subject to change but its fifteen year average is right around 6%.
As a loan officer I'm not required to represent my customer's best interests. However, as an ethical person I do my best to discuss the costs as opposed to the return the customer will receive by investing reverse mortgage money.
In my conversations with the borrower I always discuss the fact that rates will not continue at their current position indefinately. They will go back up.
Most people expect rates to be low for a good while with all the pressures from the powers that be doing whatever they can to keep them down.
When rates are high it is difficult for big business to borrow. This is hardly ever good, especially when the economy is in such bad shape as it is now.
I have no doubt rates will be down for some time, but it I have to wonder how much some of these borrowers are thinking through the costs as opposed to the benefits.
People must consider not only the interest rate but also the closing costs when factoring the true math to determine if this is really a good idea.
What they want is to tap into the equity in their home with a reverse mortgage. I'm not one of those loan officers that believe a reverse mortgage is good for everyone. It's not.
When evaluating whether a reverse mortgage is the proper financial tool for any individual or couple I look at how long the borrower plans on staying in the home. This is important as the cost to obtain the mortgage are costly for short term reverse mortgages.
Generally, we determine the cost of the loan on an annualized basis. The longer a borrower lives in the home the cheaper the loan actually becomes over time.
As some of the these phone calls are losing tons of their hard earned money they are calling to to pull money out of their equity to reinvest in other investments to recoup their losses.
One of the teasers the reverse mortgage has for these folks right now is very low interest rates on the adjustable rate option.
Currently it's below 4% which makes this a fairly attractive option. Of course this rate is subject to change but its fifteen year average is right around 6%.
As a loan officer I'm not required to represent my customer's best interests. However, as an ethical person I do my best to discuss the costs as opposed to the return the customer will receive by investing reverse mortgage money.
In my conversations with the borrower I always discuss the fact that rates will not continue at their current position indefinately. They will go back up.
Most people expect rates to be low for a good while with all the pressures from the powers that be doing whatever they can to keep them down.
When rates are high it is difficult for big business to borrow. This is hardly ever good, especially when the economy is in such bad shape as it is now.
I have no doubt rates will be down for some time, but it I have to wonder how much some of these borrowers are thinking through the costs as opposed to the benefits.
People must consider not only the interest rate but also the closing costs when factoring the true math to determine if this is really a good idea.
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