Is a reverse mortgage a good idea for your parents?
May 22, 2012, 9:54 a.m.
Tips to handle the conversation
Money and finances can be a touchy subject, and your parents might not be open to talking about it. Remember to be positive and avoid forcing the conversation. Be encouraging with the dialogue; inform your parents how a reverse mortgage is a good option to help secure their home for the rest of their life. A reverse mortgage can give them the additional funds they need to pay monthly bills, use for medical expenses or any other money needs they may have. Explain all the steps of the process to help ease their concerns.
Get a professional involved
If your parents are still hesitant about getting a reverse mortgage you could discuss their options with a financial counselor. In fact, one of the steps in the reverse mortgage process is counseling. In counseling (www.onereversemortgage.com), a counselor, who works for a non-profit counseling agency will describe in detail your parents’ options. Having a counselor describe the program will help them understand the risks and benefits.
Know your options
There are two kinds of reverse mortgage: The Standard and the Saver (www.onereversemortgage.com)
• The Standard option allows you to borrow more but comes with a higher upfront insurance premium, which equals 2% of your home’s value. The upfront insurance premium, often called UFMIP, is pays for FHA to insure the loan. The UFMIP is usually rolled into the loan, which means there is that much less cash available to the borrower.
• The Saver allows you to borrow 10% to 18% less than the standard option, but the upfront insurance premium is just 0.01%.
Depending on what your parents’ financial situation is will determine which program will work best for your parents.
A reverse mortgage is a financial tool that can help your aging parents live a better retirement. If you are worried about your parents’ finances or are afraid they do not have enough cash flow to pay for their monthly bills, a reverse mortgage could be the answer.
GREGG SMITH, PRESIDENT AND COO
Gregg Smith is the President and Chief Operating Officer of One Reverse Mortgage, LLC. Gregg has been in the mortgage industry since 1995. One Reverse Mortgage (www.onereversemortgage.com) is the largest reverse-only mortgage lender in America and has an A+ Rating with Better Business Bureau.
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One Reverse Mortgage is an Equal Housing Lender. As prohibited by federal law, we do not engage in business practices that discriminate on the basis of race, color, religion, national origin, sex, marital status, age (provided you have the capacity to enter into a binding contract), because all or part of your income may be derived from any public assistance program, or because you have, in good faith, exercised any right under the Consumer Credit Protection Act. The federal agency that administers our compliance with these federal laws is the Federal Trade Commission, Equal Credit Opportunity, Washington, DC, 20580. One Reverse Mortgage's State Disclosure Requirements One Reverse Mortgage is a licensed mortgage lender. The following states require disclosure of licensing information. (If your state is not listed, it doesn’t require a specific license disclosure or we are not currently licensed in that state.) Arizona – One Reverse Mortgage, LLC, 16425 North Pima, Suite 200, Scottsdale, AZ, Mortgage Banker License #BKBR-0115032; Arkansas – One Reverse Mortgage, LLC, 9920 Pacific Heights Blvd, Ste 350, San Diego, CA, Mortgage Lender/Mortgage Broker – License # 42785; California – Licensed by the Department of Corporations under California Finance Lenders Law – License # 609-9652; Georgia Residential Mortgage Licensee (#23385) – 9920 Pacific Heights Blvd, Ste 350, San Diego, CA; Illinois – Residential Mortgage Licensee #MB 6760594 – Department of Financial and Professional Regulation, 122 S. Michigan Ave 19th Floor, Chicago, IL 60603 (312) 797-8736, 9920 Pacific Heights Blvd, Ste 350, San Diego, CA; Massachusetts – One Reverse Mortgage, LLC, Mortgage Lender License #MC 2052; New Hampshire – Licensed by the New Hampshire Banking Department #10940-MB; New Jersey – Licensed Mortgage Banker – NJ Department of Banking, first (and/or second) mortgages only; New York – Licensed Mortgage Banker, N.Y.S Banking Department, License #107328; Oregon – License #ML-3511; Pennsylvania – Licensed by the Department of Banking-License # 21860; Texas – One Reverse Mortgage, LLC 9920 Pacific Heights Blvd, Ste 350, San Diego, CA; Virginia – Licensed by Virginia State Corporation Commission, License MC-4763. Restrictions may apply. Equal Housing Lender, One Reverse Mortgage Nationwide Mortgage Licensing System Number 2052