Reverse Mortgage Money Now Accessed for Investments
I don't suppose I need to tell you that we've lost somewhere around thirty five percent in value in the stock market in one year. Some seniors are now picking up their phone and calling me because of this.
They are looking to get a reverse mortgage. Of course the planets have to match up to their particular situation for me to entertain this with them.
Most importantly they must have a desire to stay in their home for an extended period of time. This is vital because the cost to get a reverse mortgage is not conducive for a short term mortgage
Generally, we determine the cost of the loan on an annualized basis. The longer a borrower lives in the home the cheaper the loan actually becomes over time.
What some of these folks are wanting is to use proceeds to invest either back in the market or into other investments outside the market.
What is catching a portion of their attention is the fact that interest rates are just unbelievably low. It makes the cost of that money very attractive.
As of this week the ARM is just under four percent. In the short run this makes this loan pretty nice. In the longer run it's average is in the six percent range.
In my dealings with people, although I do not have fiduciary responsibility, I have to point out that they best be getting a better return on whatever else they are getting involved in than the average.
One important item in the discussion is how rates, although quite low, will go back up to meet the averages. The current rate is a tease.
It is true that most economists and people in the know (perhaps you've seen them on Fox) feel rates will continue to hang out at a low level for some time.
The powers that really want to keep rates low are the major companies. The want to be able to borrow at low interest rates. Do they shape policy? Of course.
I have no doubt rates will be down for some time, but it I have to wonder how much some of these borrowers are thinking through the costs as opposed to the benefits.
People must consider not only the interest rate but also the closing costs when factoring the true math to determine if this is really a good idea.
They are looking to get a reverse mortgage. Of course the planets have to match up to their particular situation for me to entertain this with them.
Most importantly they must have a desire to stay in their home for an extended period of time. This is vital because the cost to get a reverse mortgage is not conducive for a short term mortgage
Generally, we determine the cost of the loan on an annualized basis. The longer a borrower lives in the home the cheaper the loan actually becomes over time.
What some of these folks are wanting is to use proceeds to invest either back in the market or into other investments outside the market.
What is catching a portion of their attention is the fact that interest rates are just unbelievably low. It makes the cost of that money very attractive.
As of this week the ARM is just under four percent. In the short run this makes this loan pretty nice. In the longer run it's average is in the six percent range.
In my dealings with people, although I do not have fiduciary responsibility, I have to point out that they best be getting a better return on whatever else they are getting involved in than the average.
One important item in the discussion is how rates, although quite low, will go back up to meet the averages. The current rate is a tease.
It is true that most economists and people in the know (perhaps you've seen them on Fox) feel rates will continue to hang out at a low level for some time.
The powers that really want to keep rates low are the major companies. The want to be able to borrow at low interest rates. Do they shape policy? Of course.
I have no doubt rates will be down for some time, but it I have to wonder how much some of these borrowers are thinking through the costs as opposed to the benefits.
People must consider not only the interest rate but also the closing costs when factoring the true math to determine if this is really a good idea.
posted by Debt Consolidation Loan at
10:55 PM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home