Why don't more people do a Reverse Mortgage?

There was a time during the 1970's and 1980's that reverse mortgages were not backed by the government (HUD). During that time, some less than honest people were issuing reverse mortgages and taking advantage of seniors. Now everyone is scared that the reverse mortgages of today are the same as back then, and they do not want to get hurt.

The truth is that today's reverse mortgages are good for every senior. A reverse mortgage allows the senior 62 or older to put their equity in their home to work. It can be put to work earning interest, or it can be put to work improving your life. I talk about the uses of funds from reverse mortgages in my previous blogs. In this blog I will let you know the history of the reverse mortgage and how it turned from a questionable product into a great entitlement for seniors.

The first reverse mortgage was done in 1961. The concept then, just as now, was to unlock the equity in the home so that the owner could use that money in a more productive way than to simply own an asset. The first publicly offered reverse mortgage product was presented to the public in Ohio in 1977.

The concept has always been good. You have worked to pay off part of all of your home, you are in a position in which you want to keep your wealth, and if the equity in your home could work for you it is a good thing. The key to a good reverse mortgage is, and always will be, how the funds are used. If the interest rate is too high, if the money is forced into an account that carries high risk, or if it is simply mismanaged, then the reverse mortgage turns from a great tool into a real problem.

In 1981 Congress began reviewing the reverse mortgage products and decided that the government needed to regulate and insure these products to protect the public. They realized the benefits of the reverse mortgage to the senior. They also realize that an insured product will bring back consumer confidence in the reverse mortgage product.

February 1988 Ronald Regan signed reverse mortgage insurance legislation into law. This was the turning point for the reverse mortgage product. From that day on, the reverse mortgage was government backed and insured.

You should always ask if the reverse mortgage you are getting is a HUD backed, and insured product. There are some private reverse mortgage products that do not carry this guarantee.

Bob
bob@az62.com
www.az62.com
623-214-6663