A reverse mortgage is still a relatively new option for homeowners. You’ve probably heard the ads on television and radio, where they tell you how wonderful it is to have a reverse mortgage their marketing methods are evident if you know what to watch for. The trouble is, a reverse mortgage does have disadvantages, they just aren’t discussed as much by those who sell them as all the wonderful advantages. Let’s take a look at some common ways of marketing a reverse mortgage.
Appeal To The Older Seniors
A reverse mortgage can only be marketed and sold to seniors who are age 62 or older. And so, the ads are targeted to that segment. They usually have celebrities who are seniors as the spokesperson, and they project a we’re all in this together, let’s help each other feeling. Seniors watching the ad are supposed to feel a kinship with the spokesperson, and as if they can trust the man or woman with gray hair like theirs.
Appeal To The House Rich, Cash Poor
Another qualification to be able to buy a reverse mortgage is for the homeowner to either own their home altogether or to have such a small mortgage that it can be either paid off when the reverse mortgage closes. Many seniors are in this position, as they have often paid off their 30 year mortgage many years earlier. Their home has a lot of equity, since house values have risen so much. If they were to sell their home, they would get a lot of money more than they initially paid. But often these elderly don’t want to leave the home they love. They want to stay in their dream home , but they are having a hard time making ends meet every month. They are house rich, cash poor . Lenders are often marketing reverse mortgages to those seniors who are having a hard time keeping up with their bills, or who have medical payments or home improvements for which they need extra cash.
Appeal To Those Who Want Their Money
Sometimes those marketing reverse mortgages stress that it’s your money, you should use it . The thing to remember is, while the money in your house (the equity) is your money, getting a loan against your home until you sell or die is a very expensive way to get access to your money. There are many considerations you should think about prior to taking out a reverse mortgage, regardless of the marketing you see and hear about them.