Reverse mortgages might be a great option for specific seniors who discover themselves strapped because that cash, however should likely still be amongst a senior’s final considerations when coming up v a financial setup in retirement. This is follow to consumer finance commentator and also syndicated radio organize Clark Howard, describing turning back mortgages on his website Clark.com.

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In a guide to turning back mortgages primarily authored through the Clark.com staff last week, Howard comment on the inquiries the he has actually received regarded reverse mortgages over the previous two decades on his syndicated radio and television shows and urges caution because that anyone that is considering the product.

“Reverse mortgages have actually been a resource of calls into our present for at least a pair decades now,” Howard says. “The market has been dirty forever. You need to be so really careful. I understand the ads that appear with the older actors who have actually high likeability ratings, but let me phone call you, there are a lot of snakes in the grass.”


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While that sentiment is current throughout Clark’s characterization of the product, he also describes just how a customer who is established to tap their home’s equity v a turning back mortgage would benefit from a most research.

“If you want to carry out this, you should shop, shop, shop. Because not all lenders are produced equal,” Howard says. “The fees vary greatly from one come another.”

Citing a December 2019 tower at LendingTree, Clark.com defines reverse mortgages together “packed v fees,” advising prospective borrowers the they deserve to expect to salary a lender dues of whichever figure is greater in between $2,500 or 2% of the first $200,000 that a home’s appraised value.

“If you have actually an appraised value higher than that, mean to pay an additional 1% of your home’s value over $200,000,” Clark.com’s employee writes. “Other fees encompass closing costs, upfront mortgage costs and loan counseling, follow to LendingTree.”

The staff describes Howard together “not keen” on turning back mortgages, suggested by his general characterization that the product category. Rather of using a turning back mortgage, Howard and also his employee recommend either selling the home and also downsizing; refinancing; taking out a residence Equity line of credit transaction (HELOC) or residence equity loan; or the an elderly to offer the house to their very own family.

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Still, the doesn’t mean that a reverse mortgage no an proper option because that some, Howard says.

“If you’re brief of cash in retirement, a reverse mortgage might be an option for girlfriend — but it’s a critical option,” Howard says. “The time to use it is as soon as you’ve come up v every other means to pay for monthly expenses and also you’re still short of money.”