posted by N. Sioris
Stumble It!
AARP, one of the principal senior protection advocates involved with designing reverse mortgage safeguards, along with HUD, says that seniors need to be very careful if they are being pitched any other financial products at the same time that they are applying for a reverse mortgage.
A 2006 AARP survey found that one in 10 reverse mortgage borrowers had been pitched a financial product along with their loan. Most of the time it was deferred annuities or long-term care insurance policies.
According to AARP, you are unlikely to earn more with an annuity than you are being charged in interest and fees on the reverse mortgage. And what is worse, you may have to pay surrender charges on an annuity that are upwards of 20% if you need to access the money before the surrender period is over. Additionally, sometimes surrender periods are longer than some seniors' life expectancy.
Using a reverse mortgage to pay for long-term care insurance is a little bit harder to evaluate, since it depends on your assets and resources, the cost of the policy and what the odds are that you will end up in a nursing home for an extended period of time. However, according to Donald Redfoot of AARP's Public Policy Institute, "If you've got to borrow to be able to pay for the cost of a long-term care policy, then you're probably not a good candidate for one."
No one knows for sure, how widespread these sales tactics are. However, the Senate Special Committee on Aging was concerned enough that they held a hearing in December, 2007 headed by Senator Claire McCaskill. And, in March the Financial Industry Regulatory Authority (FINRA) issued an investor alert warning consumers to watch out for aggressive salespeople.
This spring HUD will announce new standards for reverse mortgage counseling (which is required for all applicants, prior to getting a reverse mortgage.) The new standards will require a discussion of the implications of using loan proceeds to buy annuities.
Here at Let Your Home Pay You, we are delighted to see more stringent consumer protection policies implemented for the origination of reverse mortgages. The safer this product is for seniors, the healthier the industry will be for consumers and their families.
If you would like to receive a complimentary reverse mortgage loan quote provided by a representative that does NOT sell any other financial products, please request your personalized benefit summary today!
posted by N. Sioris
Stumble It!
According to AARP, 89% of seniors prefer to remain in their own homes as they age. Over 60% of seniors live in homes that are more than 20 years old. In order to safely "age in place" a home may need modifications that will make it easier and safer for daily activities like bathing, cooking or climbing stairs.
Reverse mortgages have become a popular way for seniors to finance home modifications, so that they can continue to live independently. Home modifications prevent accidents such as falls. One third to one half of home accidents can be prevented with modifications and repairs. The modifications can range from installation of bath and shower grab bars, counter-top height adjustments, first floor master bedroom suites to installation of private elevators.
A reverse mortgage is an ideal way to finance the cost of home modifications and repairs because of the flexibility of the options that borrowers have for receiving the loan proceeds. You can take a lump sum, a line of credit, a monthly supplement or any combination of these.
To see how much money you are able to receive from a reverse mortgage use the free reverse mortgage calculator here.
Selecting a remodeling contractor should be done very carefully. The National Association of Home Builders is an excellent place to start. They can be contacted at 1-800-368-5252 or through their website: NAHB
Other resources include your local builder's association, the Better Business Bureau and the Federal Trade Commission.
posted by N. Sioris
Stumble It!
AARP is warning seniors to be very careful when attending "free lunch" seminars where they are urged to take out a reverse mortgage and use the funds to invest in risky investments. In many cases the investment being touted is an annuity. Many annuities will have lock-out periods where you cannot access your money without paying steep penalties, even in an emergency. This type of investment is not suitable for older people.
AARP director, Steve Gools, from Michigan, said "If someone urges you to obtain a reverse mortgage to make an investment or purchase insurance, be very skeptical. I cannot think of one instance where a person should take out a loan to buy an investment."
AARP suggests that anyone that is eligible for a reverse mortgage, carefully consider whether they are good candidates for this type of loan. You are urged to seek qualified financial advice and or a second opinion. And NEVER do business with someone who is pressuring you to purchase another investment or giving you a hard sell.
Additionally, thoroughly check the licensing and credentials of anyone offering you any type of financial product, including a reverse mortgage. An excellent resource for this is FINRA (Financial Industry Regulatory Authority.)
You may also request a free comprehensive reverse mortgage benefit summary. The summary will show you a comparison between several reverse mortgages, the costs involved, and which one will provide you with the most money.
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