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Wayne Said:

Any thoughts on Reverse Mortgages? What is the upside? And the down side?

We Answered:

Reverse mortgages is all that I specialize in. I have seen it change many people's lives. As of yet I don't know of one unhappy customer. I would be glad to put you in contact with some of them who have volunteered as references. If you have not yet gone through the reverse mortgage counseling I highly recommend it as a uninterested second opinion who you can ask as many questions as you need to. It is the first step in getting a reverse mortgage and is free of charge. It also does not obligate you to do a reverse mortgage. If you do not know of any I would be glad to refer you to a few.

As your question is directed towards people who have already taken out a reverse mortgage I can only supply you with the facts but ultimately the decision is yours and you should only make it if you are %100 sure you want to.

Just to clear up one response, the bank does not own your home at any time. You always remain on title as owner. They simply have a mortgage against it just like any other mortgage. If you pass away or sell the home, it still goes to your heirs. There is a big misconception that you only get paid monthly. That is ONE option but you can also get the money in a lump sum, a line of credit or a combination of all three. If you are concerned about using up equity the line of credit may be a good option. With the line of credit you are only charged interest on what you withdraw. You can pay it back at any time and even get a tax break on the interest you are charged. The line of credit also grows currently aroundd 7% a year which means down the road you will have more money available to you.

The fees are standard fees set by FHA and can not be manipulated by mortgage companies. Basically there is:

2% of the home value or lending limit origination fee. This is how the mortgage company makes their money. Typically mortgage companies get aroun 3% and some even get up to 5% on conventional mortgages. Many times this is paid to the loan officer on the back end of the deal that the borrower never sees. So, 2% was mandated by FHA. Now if you are in a high home value it may not be a full 2% but I can get more in to that later.

2% FHA Mortgage insurance. This is what FHA charges to insure the loan. This protects you so that if the lender goes bankrupt FHA places your loan with another lender under the exact same terms. It also protects you so the if for some reason you home depreciates in value greatly and you end up owing more on the loan than your home is worth you or your heirs will not be held responsible for the difference.

Third, are the typical closing costs for doing a loan. These include appraisals, title work etc. I'm sure you've heard of no closing costs loans but those items still have to be paid for. The way lenders do that is by giving you a higher interest rate. In order for you to get the absolute lowest interest rate FHA makes lender charge these costs upfront.

All FHA reverse mortgages are standard and you should be quoted just about the same figures everywhere you go.

If you would like any more information, references or counselors please feel free to contact me.

Thanks,
Brandon
bburns@griffinloans.com

Joshua Said:

What is a good way to start marketing reverse mortgages?

We Answered:

Since the market for this product is senior citizens, it becomes a question of, "how do you target this market"? Any mix of items would work here. You can get mailing lists from brokers, take out ads in AARP's publications, or personally market to seniors. How about an "informational" class at a senior center?