Ron Meier discusses the benefits and risks of reverse mortgages.
Listen to the interview on the Business Innovators Radio Network:
Ron explained, “Reverse mortgages are a special type of deferred repayment loan that allows senior homeowners to borrow against the equity in their home. Monthly payments are always optional – not mandatory. Reverse mortgages must be repaid when the borrower dies and the home is sold, or the borrower no longer lives in the home as their principal residence. Reverse mortgages can be a useful financial tool for seniors who need extra cash to cover expenses such as medical bills or home repairs. All reverse mortgage borrowers have the same obligation as any homeowner; they must pay annual property taxes, maintain current home insurance, maintain their home, and pay HOA fees if they live in a covenant community. Reverse mortgage interest rates are competitive with traditional mortgages. Reverse mortgages can have some disadvantages. For example, when a borrower chooses the “no monthly payment required” option, the loan grows over time. This means that there may be less real estate to pass on to heirs. Another example is that if a borrower defaults on their obligations as a homeowner, a lender may decide to initiate a foreclosure since the property is collateral for the loan. Reverse mortgages can be helpful for some seniors, but it’s important to understand the risks before signing on the dotted line.
When considering a reverse mortgage, people often make a few critical mistakes. Here are three of the most common:
1-Not understanding how a reverse mortgage works.
A reverse mortgage is a loan that allows senior homeowners to convert their home equity into cash. The loan is repaid when the borrower dies and the property is sold, or the borrower no longer lives in the house as their primary residence. Reverse mortgages can be a useful way to supplement your income in retirement, but it’s essential to understand how they work before taking one.
2-Not getting a reverse mortgage soon enough.
By the time homeowners reach age 62, most have accumulated significant equity in their homes. By understanding how a reverse mortgage works, borrowers understand how they can create a “reserve line of credit” within the reverse mortgage that grows at the same interest rate as the loan. Since time is the key to compound interest, purchasing a reverse mortgage early allows the line of credit to grow. This “money bucket” might be just the solution to pay for future misfortunes or indulgences. Too many borrowers wait to use a reverse mortgage as a “bailout of last resort” when they have no other options.
3-Waiting too long to leave the oversized 2-storey house
Many people don’t realize that a reverse mortgage can be used to buy a home. By making a minimum borrower-paid investment of approximately 60% of a home’s purchase price, borrowers can move into a more suitable single-storey home and enjoy NO monthly payment required as long as they live in their new home. Most borrowers will use the net proceeds from the sale of their starting home to finance the investment paid for by the borrower.
Reverse mortgages can be a useful tool for seniors, but it’s important to get the facts on how this premium financial tool works for your unique situation. Take the time to understand how a reverse mortgage works and shop around for the best deal to make an informed decision that a reverse mortgage might be the right financial tool.
At Bank Of England Mortgage, they offer exceptional products and the best service in the industry, putting them ahead of the competition in the eyes of borrowers. For example, they offer competitive rates and have some of the most knowledgeable professional loan officers in the industry. With their expertise, they can qualify more borrowers, identify their needs, and ensure that everyone buys the loan that’s right for them and their family.
Their goal is to exceed your expectations. The combination of their excellent staff, superior operations and dedication to customer service means one thing for BOE Mortgage: they won’t stop until they exceed their customers’ expectations.
Video link: https://www.youtube.com/embed/bgIA9ZAVe0o
About Ron Meier
Ron Meier has enjoyed a 35-year career in sales and sales management, working in various industries as a representative for a leading manufacturer, US sales manager for an international manufacturer, and sales manager for division for two national home builders.
Ron is a real estate industry leader having served as Board Member, President and current Chair of the Education Committee of the Builder Realty Council of Denver, a past Board Member of the Denver Homebuilder’s Association and a past president of the 55+ Housing Council. Ron has a long history as an affiliate member of several Denver-metro REALTOR® Associations.
Ron is a Certified Mortgage Originator who brings his experience and passion to helping homeowners young and old discover the best choice of mortgage financing to buy a home or stay in the home they already live in.
Whether you’re buying, selling, refinancing, or building your dream home, you’ve got plenty to do with your Lending Specialist. Since market conditions and mortgage programs change frequently, you need to make sure you’re dealing with a top-level professional who will help you understand financing options to achieve your homeownership dreams.
Learn more: https://www.boedenver.com/pages/about/bio.php?id=2341
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