At a business meeting earlier this week I was seated beside another guest. Unknown to each other we introduced ourselves. The question that followed was the inevitable: “What do you do for a living?” 
He is an attorney in general practice. I explained that I am a Senior Advisor for reverse mortgages. Upon hearing that he paused reflectively then said, “Hmm, that’s an expensive way to go.”
 
It’s not an uncommon response.
 
What was uncommon was his silent reaction to my follow-up question: “Compared to what?” 
When speaking with a client who is considering a reverse mortgage I always suggest a couple of essential steps for them to take early in the evaluation process:
1)      Define your objective
2)     Look at every alternative
3)     Review your financial situation with a professional or trusted advisor
 
Let’s evaluate these steps: 
Defining your objective
While it may seem obvious, it’s important to identify the specific goals you want to accomplish with your reverse mortgage. For some it’s a matter of simply paying off debt to free them from monthly payments. Others want the security of available cash to cover any contingency that might arise in these volatile economic times.
 
Look at every alternative
Ask yourself a fundament question: “Do I want to stay in my home?”
If the answer is no a then a reverse mortgage makes no sense. That said, the longer you intend to remain in your home the more sense a reverse mortgage makes from an economic standpoint.
 
Cast a wide net by making a list of every conceivable alternative to the reverse mortgage. Do you have alternative funds to draw on to meet your needs? Dwindling 401K’s and diminished stock portfolios have changed many people’s thinking on this question.
 
Is there a family member, such as a son or daughter, you would feel comfortable moving in with?
 
How about downsizing your home? Would moving to smaller quarters address your needs? (A reverse mortgage to purchase is a relatively new and woefully misunderstood option where a reverse mortgage can still play a central role. More on that in my next post.)
 
As for the expense, the costs associated with a reverse are similar to closing costs of other loans. But you are not going to pay a realtor’s commission, moving costs, or dealing with any of the other distress which comes with moving.
 
Seek a Trusted Advisor
I can not emphasize enough the importance of financial advice from someone you trust. Most of us have someone we believe has our well being as their priority. Even if the need for a reverse mortgage is obvious, having a trusted advisor to assist you in the process can be reassuring.
Oh, and as to my new attorney friend? Well, he couldn’t provide a single lending alternative to a reverse mortgage which provides cash liquidity, no repayments for as long as you remain in your home, and no income or credit requirements.
I may have made a convert out of him.