Who do you turn to when you have an important financial decision to make?  Does your attorney, your accountant, or your financial planner come to mind?  Or do you have a close friend that you discuss intimate details of your financial situation with?

A recent borrower told me that he received some of his information about reverse mortgages … “from the guy at the dump”!  The dump guy told him he should never do a reverse mortgage because the bank owns the house and the bank can throw you out anytime they want. Absolutely false information!

Maybe it’s not quite so obvious but you could get equally bad advice about reverse mortgages from all of the above sources.  The guy at the dump is clearly not a reliable source of information regarding reverse mortgages.  But you also can’t assume that your attorney or your financial planner is any better informed.  Some of these professionals may have a smattering of knowledge picked up from general news articles or from their own professional publications. None of them actually study the subject in detail and very few have any experience with reverse mortgages.

Unfortunately, unless the authors are reverse mortgage professionals… much of the material printed today, even in professional journals, about reverse mortgages is full of falsehoods and misinformation.  The myths get repeated over and over, too.  Even noted news sources like TIME, CONSUMER REPORTS & MSNBC are guilty of bad research and shallow reporting.  Few of these “authorities” seem to get it right and all of them repeat comments from uninformed politicians looking for their 15 minutes of fame.

And if you really think that Robert Wagner and/or Fred Thomson offer advice that is any more reliable than our friend – the guy at the dump… good luck!  These TV pitchmen know nothing about the product(s) they hustle.  They just want the check when the TV ads run.  Yes, you’ll get a free DVD but you will also get somebody calling you every 4 hours to “follow-up” (sell you).

Rule -1 Do your own basic research. Check as many different sources as possible on the internet – but remember, in many cases you could be reading information that is in error or outdated. Do not plug in your name, address and phone information at any web site unless you want to be bombarded by companies running a boiler room phone operation designed to pressure you into completing an application.

Rule – 2  Discuss the concept of reverse mortgages with a trusted financial adviser. Be very careful here. First, question your adviser and ask “Do you have any direct experience with reverse mortgages?”  then, “Do you work with a reverse mortgage professional?”  Even some highly regarded attorneys and financial planners have only a vague understanding of the modern day reverse mortgage program… and few really understand all the pros/cons. The better one’s have established relationships with reverse mortgage experts whom they trust.  Get a referral to that consultant.

Rule -3 Locate an EXPERIENCED reverse mortgage consultant. You may need to interview 2 or 3 to find someone you feel comfortable with. Is this person willing to come to your home to answer your questions? Some will only do business over the phone – making it very difficult to judge character and professionalism.  Does this person suggest involving your children or your attorney? If your “expert” wants you to avoid involving family members or your trusted adviser, run away as fast as you can.  Is the initial conversation satisfying – did your questions get answered directly or were you fire-hosed with detail that overwhelmed you? Beware, too, of the person who stresses how much more money you qualify for under a Fixed Rate HECM – he makes much more money if you go for it and may not have your best interests in mind. Your needs will lead you to the right product.

Rule -4 Verify that your reverse mortgage consultant has completed all licensing requirements for your state. Go to Consumer Access NMLS and plug in the person’s unique number. No number? – chances are they are not registered in your state. Find someone else who is.

If you try to follow the above rules, you should have no trouble gathering information and making an informed decision. Reverse mortgages are not difficult to understand once you do your homework.

Author – Robert H. Irving, CSA®
Senior Reverse Mortgage Consultant – NMLS #19086
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