AARP Comments on Reverse Mortgages

AARP offers lots of information on Reverse Mortgages, however, some of my
clients have found that information confusing.  We have dealt with this issue by simply going over the client’s personal situation, and analyzing ALL the factors that need to be considered when choosing a Reverse Mortgage:

• The age of the borrowers
• The amount of equity in the property
• The current financial situation of the clients – will a Reverse Mortgage be of benefit or is it simply a “cushion?”  If it is a cushion, what are the reasons?  (Often there are many GOOD reasons for having a cushion before you need it and in fact, having that cushion in some cases can become a life saver.)
• Review of the amortization schedule and realistically analyzing the assumptions made on that schedule: 
  1.)  Is it realistic to assume the annual appreciation projected?
  2.)  Are the draws reflected realistic? 
  3.)  Projected interest rates?  While these are based on historical data from either the CMT or the LIBOR, what if that historical data is not an indicator of the future?  How can you know?
• The client’s overall situation — are there health care issues, or long term care possibilities down the road?  If there are two spouses, and one is widowed, can he/she make it based on the Reverse Mortgage projections?As you can see, many of these areas are suppositions – but the more you examine ALL the ins and outs of a Reverse Mortgage, the more clear you can become about whether it is right for you or your loved ones.I recommend RESEARCH, RESEARCH, RESEARCH — and get advice from those you trust.

READ AARP ARTICLE BELOW:

Should you take a reverse mortgage? Deciding whether to take a reverse mortgage should be compared to selling your house and finding a cheaper place to live, according to the AARP. Questions to consider: • How much money can you get by selling your house and paying off any existing mortgage? How does that compare with the reverse mortgage? • What would it cost you to buy or rent another house or apartment? • How much money could you earn on anything left from selling your old house after you buy a new house? • Have you considered all the alternatives that may be appropriate? These may include buying a less costly house or condo, renting an apartment or moving into assisted living. Source: AARP

 

 

The Mortgage With a Heart – The Reverse Mortgage

When I began originating Reverse Mortgages a few months ago, I learned about a completely unknown arm of the Mortgage Business to me.  Although I have more than thirty years experience in the mortgage industry, I’d never worked on Reverse Mortgages.

Now that I have, I am happy to report that working with Seniors on Reverse Mortgages is one of the most gratifying experiences I have ever known in mortgage banking.

The seniors I’ve been blessed to work with have taught me quite alot.  Most of them, for example, have virtually no debt — and that includes their homes.  Somehow these folks have learned to balance their budgets and manage their money so well, that they are now living a reality my generation can only dream about:  being debt free.

Not only that, but my clients have been the kindest people I’ve encountered ever.  I am still in touch with many of them, and in fact, am sort of an “adopted daughter” for a few of them. 

Since my parents are both deceased, it is wonderful to have acquired these wonderful people as extended family.

And what about their stories?  They will warm your heart.  You see, while these seniors are managing their money and being very frugal, many of them have most of their assets tied up in their home equity, and are living on a very tight budget from month to month.

The loans I have helped put in place did the following:

• Sandy was in her late seventies and still working 6 days a week at a senior center.  When she got her reverse mortgage, she quit her job, purchased some new furniture for her home, is going to the spa three times a week and she says she’s never been happier.  Oh, and another part of her life change?  “Now, when I go out with my friends for dinner, they don’t have to buy.”
• Roberta is a widow and was also on a very tight budget monthly.  After her reverse mortgage was in place, she did some at home decorating she’d wanted to do for years, now attends dancing classes frequently, and is able to invite people over to cook for them.  (see a pattern here?)
• Helen is caring for her critically ill husband – all alone.  She needed in home improvements for wheel chair access and extra money so she could obtain at home health care.  She also did major internal improvements that were long overdue and can now sigh a breath of relief — not having to worry about money.
• Harvey and Sandy could not sell their home and were sitting on a very large amount of equity.  Sandy suddenly took ill, and Harvey was very worried that he might have to come up with long term health care.  They did a reverse mortgage and now have access to a very large credit line which they only pay interest on when they use it.  Good news is Sandy is recovered, and Harvey has peace of mind in case something like this happens again.
• Herbert is a recent widower and getting used to living alone and doing all the house work his wife used to do.  He got a reverse mortgage, bought a new car, and is now planning trips cross country to visit his kids.
• Cynthia’s husband died suddenly and she found out the life insurance had been cancelled.  A rush was put on her loan so she could pay for the costs of the funeral and not have to worry about her own future, since she had no life insurance.

So, while the mortgage industry is struggling with a sullied reputation in some arenas, those of us doing reverse mortgages are truly making a difference for the ones we help.  And as we do, our benefits are outside of words.

Now here’s the “secret” I alluded to before.  Many of the seniors I have met are really struggling from month to month and no one in their families know it – because they are very private and very proud.  Even after we close their loans, they always make me assure them that no one else will know about it.

So, if you have friends or parents who seem to be doing “ok,” it is possible they are not doing as well as you might think.  Guide them to at least learn about reverse mortgages so they can, like my clients, experience more freedom, peace of mind and truly take a sigh of relief!

I guarantee you, it will be a great gift if you do!