Reverse Mortgages – Why So Scary?

Laurie MacNaughton ©2016

“Why are these things so scary?” That was how the man on the phone led off.

I had to laugh – not at the question, because, honestly, we’ve all been there. No, I had to laugh at his frankness.

Why are they scary? What is it about a reverse mortgage that causes significant numbers of people to dive for cover when they hear the very term?

There are many ways to answer this, but basically it boils down to this: it used to be a bad product. There was poor regulation and there were problems with some of the lending guidelines. And, frankly, there were some bad characters in the field of reverse mortgage lending.

So now you’re expecting me to say all those things have been fixed and it’s a good product.

That’s not what I’m going to say. I’m going to say all those things have been fixed and it’s a great product.

I’ve been in this field for years now, and have watched reverse mortgages perform just as intended: they create a financial buffer, they provide funds for in-home care, they extinguish income-sapping “forward” mortgage payments. And increasingly often I see them relieve aging adult children from draining their own retirement savings as they struggle to bankroll an advanced-elderly parent’s longevity.

A reverse mortgage is not a fit for everyone – no one financial product is. But as I’ve said many times, no one is going to get by on just their Social Security. No one is going to make it on their 401-K. Few are going to survive on their pension, their annuity, their IRA, their bank account – or their reverse mortgage. But when added together, all these combine to create a long-term means of financing retirement.

If you are – or someone you know is – thinking about a reverse mortgage, now is a really good time.

If you’d like more information on how a reverse mortgage may help you or someone you know achieve retirement goals, give me a call. I always love hearing from you.