Investors Be Careful with Reverse Mortgage Proceeds
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.
They are looking to get a reverse mortgage. Of course the planets have to match up to their particular situation for me to entertain this with them.
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.
The longer one holds a reverse mortgage, or in a practical sense, stays in the home the cheaper the mortgage becomes on an annualized basis.
What some of these folks are wanting is to use proceeds to invest either back in the market or into other investments outside the market.
That which is really palatable now is that rates are so low. In particlular the adjustable rate, with a line of credit option, is quity low.
As of this week the ARM is just under four percent. In the short run this makes this loan pretty nice. In the longer run it's average is in the six percent range.
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.
They cannot expect the low rates to hold up forever and must consider these rates driving up to their average level.
It is true that most economists and people in the know (perhaps you've seen them on Fox) feel rates will continue to hang out at a low level for some time.
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.
We'll have to see. My concern for some of these people is that some of these folks are not taking into consideration to true cost of getting this money to make their investments.
Whichever investment the borrowers choose should have very good returns to not only beat the interest rate on the money, but the cost of getting the reverse mortgage in the first place.
They are looking to get a reverse mortgage. Of course the planets have to match up to their particular situation for me to entertain this with them.
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.
The longer one holds a reverse mortgage, or in a practical sense, stays in the home the cheaper the mortgage becomes on an annualized basis.
What some of these folks are wanting is to use proceeds to invest either back in the market or into other investments outside the market.
That which is really palatable now is that rates are so low. In particlular the adjustable rate, with a line of credit option, is quity low.
As of this week the ARM is just under four percent. In the short run this makes this loan pretty nice. In the longer run it's average is in the six percent range.
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.
They cannot expect the low rates to hold up forever and must consider these rates driving up to their average level.
It is true that most economists and people in the know (perhaps you've seen them on Fox) feel rates will continue to hang out at a low level for some time.
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.
We'll have to see. My concern for some of these people is that some of these folks are not taking into consideration to true cost of getting this money to make their investments.
Whichever investment the borrowers choose should have very good returns to not only beat the interest rate on the money, but the cost of getting the reverse mortgage in the first place.
posted by Debt Consolidation Loan at
10:46 PM
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