Don’t Confuse Me With Reverse Mortgage Facts

I can understand why there are reverse mortgage skeptics. The product is unfamiliar to most, and confusing to others. Unfortunately, no number of charts, mathematical calculations, HUD guideline references, or even my book, will ever change the minds of many that need to experience it to believe it. Like many in my industry, I must continually defend my profession to a public that often disagrees with me, but without the facts to make an educated decision.

An interesting conversation in a hotel lobby last month highlighted this defense:

Stranger: “So what brings you to San Diego?”

I’m here discussing Home Equity Conversion Mortgages, what many call “Reverse Mortgages.”

“You do know that reverse mortgages are a scam, right?”

Well, surveys show that nearly 90% of customers say they are “satisfied” or “highly satisfied” with their decision. That is extremely high for a financial product. Scams have near-zero satisfaction ratings.

“But the bank gets your home.”

That’s the most common misconception. The homeowner holds title to the home, and when they die, the home still belongs to the estate.

“Ok, but all the equity is gone, so that’s the same as losing your home.”

Actually, research indicates that most borrowers today gain equity in their first year. From there, it is generally up to the borrower to determine if they wish to consume all their equity over time.

“Ok, but the fees are so high, and you can’t defend that”

When you say “high”, to what product are you comparing? All forms of insurance and retirement cash flow have costs. Draws from a 401k are taxable, but draws from home equity are not. The fees are similar to traditional FHA loans, but the reverse mortgage offers so much more in future security. Some find the growing line of credit to be a less expensive way to fund future in-home care. In fact, others have saved more in taxes than the costs.

“You have no idea what you are talking about.”

Actually, I’m here teaching a course on this topic, and I wrote a popular book on this topic.

“Well then, you should be in prison making license plates.”

I didn’t have the heart to tell her that most states no longer allow prisoners to make license plates. Of course, some people don’t want to be confused with the facts.

When I stopped chuckling, I typed the conversation into my phone to share with my class the following day. Of course, we all had a good laugh. However, it is sad that, like many baby boomers, she hit four of the Top 10 misconceptions in a two-minute conversation, yet she continues to reject a product that was created specifically for her generation.

For more information on the strategic uses of the reverse mortgage product, please purchase Understanding Reverse – 2017 and subscribe to this blog.

Dan Hultquist

7 thoughts on “Don’t Confuse Me With Reverse Mortgage Facts

    1. Dan Hultquist Post author

      Thanks. Feel free to share away, Melinda. I’m sure you’ve had many such conversations in your career. This one still makes me laugh.

  1. Beth Paterson

    I shake my head hearing and reading how many people base their decisions on misconceptions instead of getting the facts. Your experience is a humorous example of how close-minded people can be. I for one am glad you are not in prison and are educating people on the subject of reverse mortgages. We’ll keep fighting the fight to provide the facts.

  2. Charlie Jackson

    Hey Dan,

    I bought your book, “Understanding Reverse Mortgages – 2017” a while back. Now that the charts/tables are changing along with pricing do you suggest this book still? In other words is a new book in the making or is it not really needed?

    I’ve been considering giving your book away to clients whom are hesitant or inquisitive as I think it would help them along with me of course having conversations with them. What do you think?

    Thanks for your awesome work and support on this topic.

    Have a GREAT Day and God Bless you Dan!

    Sincerely & Respectfully,

    1. Dan Hultquist Post author

      Thanks for your support of the book, and I hope to blog soon about the many ways mortgage and finance professionals are using the book. Sorry for the long delay in responding, Charlie. We’ve been pretty busy with all the regulatory changes and rewriting the book over the last month. Yes. The new (2018) edition is a complete overhaul of the content and I think you’ll be pleased. It has more content in less pages and all of the regulatory references are footnoted and stuck in the back.
      Thanks again,

  3. Rich

    I’m going through the process right now with my Mom and although we haven’t closed yet it has been a great experience so far. The cost have not been high at all. Some people do have to pay for the counseling session. The charge was around $135 but they do offer free sessions, but that would have required us to wait until October to get into a free session. You also have to pay the property appraisal fee which was $500. Those were the only upfront charges she had.

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