A recent article in The Wall Street Journal featured the story of a 62-year old retiree who used a reverse mortgage to pay off the mortgage on his home. He and his wife were then able to stop paying $2,200 a month to their mortgage company and instead uses that money for everyday living expenses. He was quoted as saying, “This saved mine and my wife’s life.”
We don’t believe that reverse mortgages will save everyone’s life, but it is gratifying to see traditional media outlets detailing the benefits of a reverse mortgage. FoxBusiness.com has also published at least two stories on reverse mortgages since the beginning of the year.
But we found factual errors in some of these stories
One of the stories on Fox Business did have a factual error. The story read, “If your house is worth $250,000, you can get up to $250,000 either as a line of credit, all in a lump sum or via monthly payments.” The truth is that you can only take a portion of the equity, and the amount you are eligible for varies with your age.
The Wall Street Journal, however, got the loan limits correct. That article reads, “The limit is now 62 percent of a home’s value for a 62-year old; an 80-year-old can borrow up to 72 percent of the home’s value.” These limits are set by the government agencies that back reverse mortgages.
At Legacy Reverse Mortgage, we believe that education is the most important step in the reverse mortgage process. We try to offer education to potential clients because they will probably only go through the application and funding process once in their lives.
It’s not reasonable to expect home owners to know what questions to ask under those circumstances. Therefore, in our opinion it is the responsibility of lenders and reverse mortgage specialists to provide the right information. Experts in the field will also be able to help to identify the potential borrower’s personal circumstances that impact the decision on whether or not a reverse mortgage is right for them.
Reverse mortgages are a flexible financial planning tool that could be used to pay off an existing mortgage or for any other reason that a borrower chooses. But like other financial products, a reverse mortgage will not be right for everyone.
Articles by major news organizations are a great first step in consumer education, but the factual error in the FoxBusiness.com article shows why you need to consult with an expert to double check what you read.