The media and politicians are stating reverse mortgage funds shouldn’t be used for pleasure items such as vacations, giving to children, buying a car, boat or RV. Yes, if a borrower uses their funds now for pleasure items, give money to their children or grandchildren, or even on bills or other expenses, there is a chance they won’t have funds at a later date. Seniors, as anyone, should use their funds wisely. But who are ‘we’ (media, politicians, lenders, counselors, attorneys, public, etc.) to judge and make decisions on how one’s funds should be used? Do you want someone else making decisions for you? Do you want the media, politicians, your friends, a lender or counselor to tell you that you can’t take a dream vacation because you may not have funds for your medical bills or housing at a future date?
Larry and Lori did a reverse mortgage so they could continue to travel to Florida every winter. The reverse mortgage allowed them to continue their lifestyle of escaping the cold Minnesota winters and to visit family in Florida. Who are ‘we’ to determine whether this was right or not? When their health started failing, they could no longer make the trips however the reverse mortgage gave them those extra years of travel and the security to be able to do so.
Two days after closing her reverse mortgage, Jane was on a flight to England to fulfill her dream of seeing a play that was ending the weekend after the closing. The reverse mortgage made that dream a reality. Were we to take control and choice away from her and say this was the wrong use of reverse mortgage funds “just because” in future years she may need funds for “something” else? Were ‘we’ to take that dream away even if she might never be short funds for who knows what in the future?
We talk about creating a “bucket list” – the things we want to do before we die. After working for years, raising families, serving their country why can’t a senior use their reverse mortgage funds to check an item or items off their “bucket list” while they are still healthy and able to fulfill their dream? Seniors shouldn’t be treated like children, as one who can’t make their own decisions. Living on this earth for many years does not mean one can’t make their own decisions. If for some reason they cannot, then they should have a conservator appointed.
After his wife died, Bob did the reverse mortgage to replace the additional income lost from her Social Security. Catching up on bills, with peace of mind of having extra cash flow each month by receiving monthly payments, he was so excited that he could also take a dream vacation and go to Yellowstone. Taking the trip with his nephew last summer, months later he is still glowing that he was able to fulfill his dream. Was this a “wrong” decision on his part? Were we supposed to kill his dream?
Carl was in need of a new car. Because he didn’t want to make car payments, he did the reverse mortgage to meet this need of purchasing a new car without having a monthly payment. He’s still able to drive, should ‘we’ deny him his dignity and independence and say he shouldn’t purchase this car just because he is older and may have a need of funds for who knows what in the future?
If YOU, at age 30, 40, or 50, take a vacation today, are you aware that you may not have funds for your mortgage payment (or rent if you’re a renter) or living expenses, medical bills, etc. at some future date? What if you take a vacation today and next month you are in a car accident and left disabled or diagnosed with cancer and can’t work, make your mortgage or rent payment, and pay your bills? Since this is a possibility for any one of us, do you not take that vacation just because this could happen to you? We all need to act responsibly but if we live totally as if the worse is going to happen to us no one would “live” life today – we would just live in a cocoon not really living.
If you, at age 30, 40 or 50, were forced to pay off your mortgage how much money would you have for “life” – pay for food, clothes; daily needs such as soap, shampoo, hair cuts; utilities; taxes; maintain your home; automobile, gas and auto insurance; health insurance and medical expenses; go out to eat; take your vacation, etc.? Since everyone who has a mortgage is using the equity of their home for these purposes, I bet you would have a very different lifestyle if you weren’t using the equity in your home to maintain your lifestyle – whether a senior or you or me. The media and politicians need to stop judging the decisions seniors make on how they use the equity in their home, just because they are a senior doesn’t mean they can’t make their own decisions or mean they need to live in that cocoon either.
Bonnie did a reverse mortgage to pay off her forward mortgage and improve her cash flow. Years after the closing of her loan, Bonnie wrote, “A reverse mortgage has brought me bountiful solutions to resolving financial issues. Its benefits enabled me to achieve the means to better enjoy living in my own home. The equity available was spent in several areas for home improvement. Herewith also were personal challenges, as a pledge to my church fulfilled and travel to family weddings and reunions assured.
“With a reverse mortgage you begin to have independence anew and you begin to feel more secure. Being free from monetary anxiety you have better control over spending your equity. Thus a respect for yourself increases.”
Are you going to say these personal uses of her reverse mortgage funds were wrong? Who are you or I to judge? I certainly don’t want someone to tell me how to use the funds from my mortgage. And I don’t want to tell a senior that they shouldn’t use their reverse mortgage funds to fulfill their dreams just because someone else doesn’t use their funds wisely or because they may not have funds for who knows what in the future.
With all of this said, I do believe it is important one should plan for what may happen in the future and everyone should use their funds wisely. An elder law attorney, financial advisor, and CPA educated in senior issues and reverse mortgages* can help seniors plan and think through their situations to help them make the best decisions for their circumstances. Note, I said help, not make the decisions for them. In the end, it should be the individual senior’s decision on what they choose to do with their reverse mortgage (or any) funds.
*They need to be educated with the facts from a reverse mortgage expert, not the media, politicians, word-of-mouth, etc. or they could be guiding the senior to make bad decisions.
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