What do you think of reverse mortgage for people 62 and older?

Question

I'm a loan officer doing reverse mortgages for the elderly in the state of CA. The largest one to date I have done was 2.6 million. I have found this program to help so many people that are 62 or older. True this will eat up equity in there home but its there home and there equity. This is the part that kills me. Why do “some” the children of the elderly feel like this is there money and think that there parents must suffer and live a hard life with less.

Answer 1

Reverse mortgages are tricky things. I think it's a good idea, but from what I've heard, there are a lot of consumer unfriendly terms in those mortgages, as well as very high fees and commissions. Right now, I think it very wise for anyone thinking about them to take it slow, and even pay a lawyer a few hundred bucks to review the terms.

Enlighten me. Do you get a good commission off of those reverse mortgages. Are there a lot of fees?

Answer 2

I think California's a bit different than some other states, in that some adult children feel not entitled to but dependant on their parents' home.

I know that if my parents and my husband's parents sold their homes (that's what this is, ultimately), we would not be able to afford to buy a house in southern California for a very long time. (My parents bought their house for 175k and now it's worth 500k 12 years later.) House prices are way out of reach for the younger generations in CA.

That said, if they're so concerned about their parents' homes, these adult children should also help the parent out financially if they need it and not put them in a position where they have to get a reverse mortgage.

Answer 3

My Dad and Uncle took one out on my Grandmother AGES ago, before it was even referred to as a Reverse Mortgage - but I can't remember what it was called. We jokingly referred to it as her Life Insurance Policy (simply because it paid her for living).
I thought it was a brilliant idea at the time, myself.
I think that when new things come out people are a little scared. It sounds too good to be true - and we get so many too good to be true Emails these days, I guess it's hard to differentiate!

Answer 4

I think the fear the children have is that their parents will be scammed. Reverse mortgages are something not a lot of people are familiar with and don't trust because of that. With the real estate market taking such a dive in so many places, you can't blame the children of the seniors involved in any real estate deal being a little suspicious.

Answer 5

I don't like the idea, personally. There are other ways to get additional income without giving the family house to a bank.

I would be very upset if my parents did this. They aren't poor by any means, and I am happy that they are spending up "my" inheritance on themselves. But you have to admit, banks are worse than loan sharks.

Answer 6

I completely agree. Many would rather see their parents standard of living reduced in the golden years than allow "their money" to be spent. I believe this to be absurd. I also feel that the trend will be abating to some degree in the coming years as the options become fewer and fewer.