Equity in a home is, of course, one of the benefits of owning in the first place. After all, who wants to go through the loan process, make payments and pay for all the repairs involved in owning without some monetary payoff.
The reverse mortgage was originally invented to help seniors with financial issues. Without any other type of savings the homeowner can access the equity to solve money issues.
The reverse mortgage is not without its shortcomings and is not the proper tool for all situations.
The reverse mortgage is profitable to a lender only when a borrower decides on getting a reverse mortgage. No return is made by talking the senior out of borrowing. The door is open to unscrupulous people.
Being a loan officer, I hold most of my colleagues in esteem. I know the majority will tell the truth and give an honest assessment supported by all available knowledge.
That being said a certain minority resides in this business (as with any business), made up of unethical individuals willing to ignore anything associated with the golden rule to get what they want.
I formerly worked in the copier business, and my company (which shall remain nameless) had a saying for the sales people: Whatever it takes. They really meant it too. Do whatever you have to do to make a sale.
In the reverse mortgage business, some people feel that way too, but stay confident. The loan officer is not your only point of contact to help you make an informed decision.
Federal law requires serious parties to have a counseling session with a neutral counselor of reverse mortgages, approved by HUD, before continuing with the transaction.
For those being pressured into a reverse mortgage, who could otherwise solve money problems in a less costly way, this is a great little built-in insurance policy. The counselor should be able to weed out poor advice and give the senior educated guidance.
Someone is always lying is wait to trick or take advantage of seniors, and this is one way to greatly avoid that possibility.