Reverse loans are highly regulated and the senior consumer is well protected from any type of financial abuse and over the last decade many regulations have been put into place which makes a reverse loan a very safe option for seniors to use.
Before anyone can start the loan process, they must complete HUD Counseling with an approved Counseling agency and they can ask questions and discuss their concerns with the counselor.
A list is provided to the potential borrower with a proposal provided by the Loan Officer that offer many counseling agencies for them to chose from.
All fees are disclosed in the proposal, and can be discussed with the Loan Officer. Along with federal regulations and disclosures, each state has their own set as well.
Spouses who are under the minimum age 62 will be able to remain in their home if the older borrowing spouse predeceases them, and no longer have to worry about selling and moving out of their home.
Seniors are worried about out-living their money, and with medical expenses, care giving costs, utilities, food and other monthly expenses, funds from a reverse loan can make life easier and certainly remove the stress and worry about running out of money.
They are a very safe and sensible option on how to use the equity in your home, for funding and preserving your retirement and could be an important part of a financial strategy to make your savings last longer.
As I am writing this post, it was noted today that inflation has increased to 7%, the highest it has been in many years, and although, I am not an economist or a financial advisor, and certainly not qualified to discuss why this is happening, I do know that it is affecting how much a dollar can buy.
Most seniors are on fixed incomes, and sometimes they only have social security to rely upon to use towards their monthly expenses. There was a slight increase for 2022, but it is essentially wiped out due to the increase costs of food, utilities, and goods.
Given the costs of medical insurance, unplanned medical expenses, or home repairs and maintenance, many seniors do not have enough money each month to cover even their essential and ongoing expenses.
My more recent reverse loan clients are taking advantage of historically low mortgage interest rates, and increased equity in their homes and are refinancing and using a reverse loan to eliminate their concerns about running out of money.
They have no mortgage payments, access to their equity for additional income, and still own their home.
Life is so uncertain at this time, due to the Pandemic and social issues, but at the least funds from a reverse loan could be an antidote for financial insecurity.