This article was originally published in 2016
I am a huge Tom Selleck fan. I love everything this guy is in. From his early start on my all time favorite show, The Rockford Files, to Magnum P.I., Jesse Stone, Three Men And A Baby, Blue Bloods; I love them all. It also makes me that much fonder to know that he is a one of the very few conservatives in the entertainment world.
Tom Selleck is not someone, however, that I expected to see in a commercial promoting reverse mortgages for AAG. Reverse mortgage pitchmen are usually actors that are in the twilight of their careers. Tom Selleck is a bonafide present day superstar, and according to some reports is the highest paid actor in the world. So, someone the level of Selleck taking on such a role is more than a little out of the ordinary. Selleck is not the first big name pitching reverse mortgages for AAG; Senator and actor Fred Thompson did so for years before his passing last year.
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Aren't Reverse Mortgages A Scam?
Doesn't everyone already know that reverse mortgages are simply a scam that banks use to steal the homes of elderly Americans? This is what most people believe... I can not tell you how many times over my career I have heard comments like this. I have to confess that I was lukewarm on the concept myself until just a few years ago. My father called me fifteen years ago and told me about a reverse mortgage ad he saw with famed actor Robert Wagner. He asked me if I thought he should look into the idea for himself. For the first time I had a personal reason to actually do some research on this, and report back to my parents what I thought they should do.
Why I Like Reverse Mortgages For Some People
In the end, I advised my parents to go ahead with the reverse mortgage. As it turns out, it was the best financial move they ever made. My father became disabled in his mid-thirties, and my parents had virtually nothing saved for retirement. They did have substantial equity in their home, however. In their case, they did not have a completely paid off mortgage, but had about 50% in equity. This meant that they would not be receiving any income from a reverse mortgage, but it would eliminate their mortgage payment for the rest of their lives. They could also stay in the Florida home that they loved until they both passed.
My father lived for nine years after they got the reverse mortgage. I can tell you that there was simply no way that my mother could have remained in her home after my father passed in 2011. My mother still lives in this home today without a monthly mortgage payment. Although some relatives scoffed at the idea at the time, many of them now say they wish they had done the same.
The elimination of $1,000 in monthly mortgage payments gave my parents enough breathing room that they were able to enjoy those final years together with enough money to be comfortable. Despite having only Social Security and some modest pension income, this was a $1,000 monthly bill they did not have to pay. This made an enormous difference in their financial picture. If you are age 62 or older, have a home with substantial equity, and insufficient income for retirement, you might very well be a candidate for a reverse mortgage yourself.
The Biggest Objection To Reverse Mortgages
As the partner in a mortgage brokerage firm in the mid 2000's I was invited to an all day seminar on reverse mortgages. One third of the seminar was surprisingly dedicated to overcoming the objections of adult children. No, this was not about keeping mom and dad from being ripped off, but all about the loss of their inheritances. What? Who would want their parents to live out their final years struggling financially so that they could receive an inheritance?
According to both the information I gleaned from this seminar, and my own anecdotal experience, many adult children seem to have their own interests above their concern for the well being of their elderly parents. Sorry adult children, but your parents have shelled out enough money raising you. They should not be living in poverty for the sake of leaving you an inheritance. I should add, however, that there were a number of creative strategies discussed on how to benefit adult children. This included ideas such as investing some of the funds using a trust, and even buying life insurance for the benefit of adult children and grandchildren.
Shopping For A Reverse Mortgage
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Reverse mortgages are highly regulated by the government, and are also government guaranteed. There are a lot of safeguards in place, including mandatory counseling. Learn more about reverse mortgages at the Department Of Housing And Urban Development website. My favorite site for mortgage shopping (Lending Tree) has a tremendous amount of resources on reverse mortgages, including a reverse mortgage calculator, and a great FAQ section as well. Another resource that I love is the book Reverse Mortgages For Dummies. The book is out of print, but is still available through Amazon. It does a wonderful job of explaining the concept in a way that is very understandable.
In my own case, when I turn 62 (in eleven years) I am probably going to get a reverse mortgage myself. My reason will be much different than my parents. My wife and I will have more than adequate income during retirement, but we plan to use this 'extra money' to travel. We also plan to invest some of the money for children and grandchildren as well.
If you have a reverse mortgage or have considered one, please use the comments section below and we can start a conversation.
Disclaimer: Anyone considering a reverse mortgage should consult a licensed financial professional before making any changes to their financial profile