It’s amazing how facts can get twisted and actually be made to present arguments for two opposing sides. I recently ran across and article dealing with Reverse Mortgages and the author used all the facts, and yet painted a valid argument against Reverse Mortgages. (obviously the author was selling another financial instrument). Just for fun lets take a look at some facts and present both sides:
- Fact – A reverse mortgage taps into the equity of your home, creating a liquid asset. (i.e., cash).
- Con – You never make a mortgage payment, so your debt is always increasing!
- Pro – You never have to make a mortgage payment and can draw an income to pay other bills.
- Fact – Funds from a reverse mortgage are paid out as tax free income.
- Con – Funds from a reverse mortgage are not always tax free!
- Pro – Funds from a reverse mortgage are always tax free. However if you invest those funds into another income generating product, (Stocks, Bonds, etc.) you will have to pay subsequent income tax on earned income.
- Fact – Reverse mortgages have higher fees, than traditional forward mortgages.
- Con – The closing costs on a reverse mortgage are steep and cut into the equity of your home!
- Pro – The closing cost of reverse mortgages are higher than forward mortgage products, but the overall long term costs are significantly less. Essentially you are paying the long term interest up front.
- Fact – There are three different types of reverse mortgage products.
- Con – Not all reverse mortgages are the same!
- Pro – There are three types of reverse mortgage products that allow seniors to choose the one that is right for them.
As you can see from these four facts, people will skew the fact to meet their position. But I do need to part with two quick comments. One, it is absolutely true, reverse mortgages are not for everyone. And in some cases their may be better options, but don’t let anyone use a fear tactic in deterring you from considering one. And two, I do have to mention that the company who was bringing up all the “cons”, also published a free, “non-biased” booklet, entitled Dirty Little Secrets About Reverse Mortgages.
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