Reverse Mortgage alternatives..

Some alternatives to the Reverse Mortgage….

The Reverse Mortgage (RM) is a financial tool that can be beneficial to many senior homeowners, but it is not for everybody. When speaking with clients, I will explore other options if they seem more feasible or a more make sense solution to the problem. I have no problem telling a potential client that the RM is not the best solution for them. Here are some alternatives we may discuss when considering the benefits of the RM…

·       *Traditional Refinance – In some situations looking at a traditional refinance might make sense. This may make sense if the client is looking to consolidate debt into a lower rate, and significantly lowering their overall monthly payments. If income/cash flow is not too much of an issue and the new lower payments may make the difference in comfort, this might be suggested. Main concern may be qualifying, as many seniors on a fixed income may have issues meeting the Conventional loan qualifying requirements..

·        Bank line of credit – If a senior homeowner is looking for a short term solution, a bank line of credit could make sense. A senior who knows they will be leaving the home within a year or so may find that the bank line of credit will have less upfront fees and possibly less paperwork. Most likely the homeowner will be using the line of credit to make payments on the line of credit, this option can get costly over time and the available funds could be used up pretty quickly. Also, over time the growth feature of the line of credit on the RM could make a nice difference. The amount available on the RM line of credit grows on an annual basis.

·        Private money loan – This can be a good short term option that can possibly close quickly and with a little less paperwork…Rates are not great and closing costs can also be high…Could be an option if the property is not occupied by the customer.

·        Rent rooms – If the senior homeowner is having cash flow issues and has a home with spare rooms, renting those rooms may be a solution.

·        Family assistance – Some seniors have made arrangements with family members such as an equity share situation.

·        Cut expenses – There may be areas that can be cut to make a financial difference. I have had some clients, that through research and suggestions, we have helped them cut $3-5,000 per month.

·        Sell the home – Selling the home is an option especially if the homeowner(s) are looking to move to an assisted living community. This can be a much more expensive option than an RM where it may cost from 5-8% of the sales price…To many seniors this is the last resort as they have been in their home many years and wish to live there as long as possible.

The Reverse Mortgage has been a great option for many senior homeowners. Some will say it made a significant impact on their life. It is not for everybody, and we will discuss the other possibilities as mentioned above. I am not about selling people, but am about working as a consultant. I want to help the senior homeowner, even if that means not doing business with me.