Problems With Reverse Loans

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Reverse loans have certainly been on the forefront of the media in the last year or so, haven't they? It seems that all of a sudden we are seeing lots of ads on television, newspapers and magazines; people are talking about them quite a bit, too. There is certainly a great deal of information on them through the Internet as well and there are "experts" everywhere, touting their benefits.

It seems that you can't get away from hearing about them, as apparently they are the next best thing "to fresh sliced bread".! There are lots of amazing claims about how a senior can change their life and in the process, short-change their kids' inheritance, too!

"Hey! Where's the money Mom and Dad are supposed to leave to us? How come they blew it all and didn't tell us anything? After all, this was our inheritance, we've been waiting for it and we deserve to have it."

Now as everyone knows (supposedly), the evil Bank actually takes back the house at the end of the loan and the poor, poor heirs end up with only furniture, old clothes, a garage filled with even older Life magazines and the detritus of many years of living in the same house. And possibly their parents dog or cat...

The confusion is acerbated by newer "experts" in the industry, who will say anything to get a loan app. They lack training and experience and they are in many cases, extremely pushy. Totally turning off a Senior and making a very bad impression in the process.

So, I just addressed ever so briefly, the "problems" with Reverse loans. It's perception. And it's wrong.

Now if the parents chose to not leave their estate to their kids, well...that's their choice. But it's important to know, that when the loan does become due (after they have passed, away ) the home does go to the designated heirs.

Now the bank is expecting to be repaid what they advanced to the borrowers, plus interest and depending on how much of the money they used and interest rates; the loan might be large or it could be small. And in spite of another misconception, there is always equity left over for the heirs. It's not all "used up"!

In any event, the kids still get the house. Senior parents don't have to move in with their adult children (Trust me, they don't want to live with you), they maintain their independence and can call their own shots without asking permission. Plus they're not asking their kids for financial help.

"Whew, what a relief! Everyone is a whole lot happier!

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