Review of “The Reverse Mortgage Advantage”
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You know the reverse mortgage concept has taken off when you see a new “reverse mortgage” book showing up every other month on Amazon.com. Of the twelve first-page Amazon search results for “reverse mortgage”, five are book titles released in 2006. No doubt more are coming in 2007.
One of the 2006 books - and the current top-ranking reverse mortgage title - is The Reverse Mortgage Advantage: The Tax-Free, House Rich Way to Retire Wealthy! by syndicated personal finance columnist Walter Boroson.
When I first picked up this book, I had a feeling of déjà vu. Features of the book’s cover - colors, photo, even subtitle - are a lot like those of another title I had read a few months prior, The New Reverse Mortgage Formula - How to Convert Home Equity into Tax Free Income.
Here are my thoughts on the book:
Three Things I Liked About The Reverse Mortgage Advantage
1. Annuities. The book provides a good discussion of the pros and cons of linking annuities with reverse mortgages. This has been an area subject to abuse and fraud and some authors seem to steer clear of it. California even enacted an outright prohibition on arranging annuities for reverse mortgage borrowers prior to expiration of the three-day right of recission. Still, in the right situation with the right kind of annuity, the reverse mortgage-annuity strategy can make sense. The author covers these situations and covers the various types of annuities clearly.
2. Question and Answers. The first chapter of the book is an introduction to reverse mortgages for “total beginners” and is nicely formatted with good, basic questions and clear answers. A later chapter is in a “quiz” format that, again, effectively provides clear answers to questions potential borrowers would (or should) be asking. Readers will find both quite helpful.
3. Getting Advice. Chapter 7 (”Where to Get Good, Unbiased Advice”) is another useful section of the book. Good tips are given for selecting not only a reverse mortgage counselor, but also for getting help from other qualified sources like financial planners and elder law attorneys. A good discussion on the merits of hourly-fee financial planners is included.
Three Things I Didn’t Like About The Reverse Mortgage Advantage
1. One-sided. The title of the book leaves no doubt that the author’s goal is to present the case in favor of reverse mortgages. Still, the Say Yes to Reverse Mortgages! sales-pitch tone that resonates throughout the book is more than I cared for. For example, Chapter 2 starts off with this unabashed statement:
“People who have obtained reverse mortgages tend to use a single word: godsend.”
The chapter goes on to recite a dozen or so personal stories - mostly about how reverse mortgages have changed retirees’ lives for the better. (More deja vu ala The New Reverse Mortgage Formula.) Interesting reading, but hardly an objective sample of viewpoints. The author freely notes this: “Their names in many cases were obtained from men and women in the reverse-mortgage industry, so they are a selected sample - selected, no doubt, in part because of their happy experiences.”
While the book doesn’t completely avoid negative aspects of reverse mortgages, don’t expect to read a balanced critique here.
2. Advertisements. In some cases, the marketing overtone of the book turns to outright advertising for a few select firms. Chapter 12 (”Looking for the Right Lender”) is just six pages in length. Three of these pages consist entirely of marketing spiel (complete with toll-free numbers) from the four largest reverse mortgage lenders. The author acknowledges these materials “come mainly from their official home pages on the Web.” Surely the space could have been better spent on something like “how-to” techniques for selecting a lender - e.g. how to check lenders’ references, how to determine their level of reverse mortgage expertise, how to compare fees, etc.
3. Not Much New Information. The reverse mortgage market is exploding, but basic program concepts and outlines haven’t changed much in the last several years. This is especially true for the most popular reverse mortgage program - HUD’s Home Equity Conversion Mortgage (HECM). The preface to The Reverse Mortgage Advantage notes one “recent important change: The Department of Housing and Urban Development now allows counselors from the National foundation of Credit Counselors and Money Management International to provide guidance about its Home Equity Conversion Mortgage.” It’s hard to imagine an average reader learning about reverse mortagages regarding this as a major development.
If you’ve already read a reverse mortgage title, you won’t find much new here. The target audience clearly is the consumer with little knowledge of the reverse mortgage concept. For my money, a couple of the earlier published titles - e.g. Reverse Mortgages For Dummies - do a better job introducing the reverse mortgage concept and covering program basics.
Overall Rating
Overall, this book rates 3 out of 5 stars. (The book cover image above is an affiliate link to Amazon.)
If you’ve read this book, please feel free to leave comments below.
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