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Monday, January 12, 2009
It comes as no revelation that the market is down some 33 percent since this time last year. Of course lots over 62ers have their money here and many are beginning to call me on the phone.
What they want is to tap into the equity in their home with a reverse mortgage. I'm not one of those loan officers that believe a reverse mortgage is good for everyone. It's not.
Most importantly they must have a desire to stay in their home for an extended period of time. This is vital because the cost to get a reverse mortgage is not conducive for a short term mortgage
As the borrower stays in the home for longer periods the less pricy the loan becomes as we determine the cost of money on an annual percentage.
It's pretty clear to see a certain level of panic as some of these folks have lost much of their all important nest egg. Now they want money to reinvest.
That which is really palatable now is that rates are so low. In particlular the adjustable rate, with a line of credit option, is quity low.
For the week of January 6 to January 12 the rate on the adjustable is well below 4%. If we look at this loan over the last 15 years, it's average is around 6%.
As a loan officer I'm not required to represent my customer's best interests. However, as an ethical person I do my best to discuss the costs as opposed to the return the customer will receive by investing reverse mortgage money.
They cannot expect the low rates to hold up forever and must consider these rates driving up to their average level.
Many in the marketplace are taking the position that rates will be low for some time with so much pressure to keep them low.
The powers that really want to keep rates low are the major companies. The want to be able to borrow at low interest rates. Do they shape policy? Of course.
We'll have to see. My concern for some of these people is that some of these folks are not taking into consideration to true cost of getting this money to make their investments.
The investment best have a pretty good return because it isn't just the rate but the cost of getting the reverse mortgage must be factored in as well.
What they want is to tap into the equity in their home with a reverse mortgage. I'm not one of those loan officers that believe a reverse mortgage is good for everyone. It's not.
Most importantly they must have a desire to stay in their home for an extended period of time. This is vital because the cost to get a reverse mortgage is not conducive for a short term mortgage
As the borrower stays in the home for longer periods the less pricy the loan becomes as we determine the cost of money on an annual percentage.
It's pretty clear to see a certain level of panic as some of these folks have lost much of their all important nest egg. Now they want money to reinvest.
That which is really palatable now is that rates are so low. In particlular the adjustable rate, with a line of credit option, is quity low.
For the week of January 6 to January 12 the rate on the adjustable is well below 4%. If we look at this loan over the last 15 years, it's average is around 6%.
As a loan officer I'm not required to represent my customer's best interests. However, as an ethical person I do my best to discuss the costs as opposed to the return the customer will receive by investing reverse mortgage money.
They cannot expect the low rates to hold up forever and must consider these rates driving up to their average level.
Many in the marketplace are taking the position that rates will be low for some time with so much pressure to keep them low.
The powers that really want to keep rates low are the major companies. The want to be able to borrow at low interest rates. Do they shape policy? Of course.
We'll have to see. My concern for some of these people is that some of these folks are not taking into consideration to true cost of getting this money to make their investments.
The investment best have a pretty good return because it isn't just the rate but the cost of getting the reverse mortgage must be factored in as well.
posted by Credit Counseling at
11:03 PM
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