When you don’t know what you don’t know about reverse mortgages

Are you basing your opinion of reverse mortgages on what you and others don’t know?  People say they’ve heard a lot of negatives about reverse mortgages or that they should stay away from them.  When I ask what they’ve heard or why they were told to stay away from them, I get the answer, “I don’t know, I was just told to stay away from them.”  Or they really don’t know much about them yet they are still negative about them.  After I spend time educating them on the facts of reverse mortgages the response becomes much different: “Wow, this could be a life saver for me.”  Or “That sounds wonderful.”  And my clients who have their reverse mortgage in place are thrilled and pleased on how it’s changed their lives for the better – giving them security, independence, dignity, and control.

Don't know what I don't knowSo my question to you is do you know the facts about reverse mortgages or are you basing your opinion about reverse mortgages by listening to the negatives and incorrect statements from those who don’t have the real details?  If you were having health problems, would you listen to a plumber about what you should do about your health or would you go to a doctor who specialists in the area of need for the facts?  The reverse mortgage is the same, get your facts from a reverse mortgage expert, not the media, politicians, a real estate agent, your neighbor, friend or anyone else who isn’t a specialist in reverse mortgages and can provide the true facts.

The media often has someone they call an expert from the financial or real estate industries talk about reverse mortgages as if they know what they are talking about.  However, those of us specializing in reverse mortgages find a lot of incorrect and misleading statements by these so called experts.  They too don’t know what they don’t know because they don’t consult with the true experts in the industry before giving information.  Politicians who are trying to protect seniors haven’t learned the real facts about reverse mortgages so they too are giving advice and/or a fear factor based on what they don’t know.  If they would talk with the experts they may do a better job of providing the facts versus spreading myths.

As a senior advocate and an expert who has specialized in reveres mortgages for 10 years, let me help you get some of the real facts.  Do you know…

  • A reveres mortgage is a mortgage with special terms for senior homeowners 62 and older.
  • You own the home, no one else does.
  • You may be able to stay in your home as long as it’s your primary residence or until your 150th birthday.  (You are responsible for paying taxes, insurance, and maintaining the property and abiding by the terms of the loan agreement.)
  • You won’t lose your home because of a reverse mortgage – you don’t have to make monthly payments.
  • Tax-free money* is government insured and guaranteed to be there for you. (*consult tax advisor – but make sure they know the facts about reverse mortgages)
  • You or your heirs get to keep any remaining equity after the loan is paid off.
  • There is no personal liability to you or your estate when repaying the loan and you or your estate are not retaining ownership.
  • There are no out of pocket costs, income or credit qualifications for the loan.
    • Closing costs typically become part of the loan balance.
    • A credit report is pulled to check for any federal leans or debts that would be required to be paid – not to check your credit score.
  • You can’t access 100% of your home value at the time of your closing – the amount available is based on your age, you home value or FHA lending limit (currently $625,500), and an Expected Interest Rate.
  • The funds may be received in a line of credit, lump sum, monthly payments or a combination of these.
    • Line of credit grows
    • Monthly payments may be received as tenure payments (for life as long as the home is your primary residence) or structured to fit your needs.
  • Historically the interest rate is lower than conventional loans.
  • Closing costs are comparable to conventional loans, in the big picture they are not higher – see my post: “Reveres Mortgage Closing Costs – High or Mythical
  • The majority of the loans are FHA insured (proprietary products aren’t currently offered in Minnesota).
  • There is no magic number for how long you should live in your home – it all depends on your individual circumstances.  However the longer you stay in your home the less expensive it becomes because the closing costs get spread out over a longer period of time (same for conventional mortgages).

While a reverse mortgage isn’t right for everyone, every one should at least know the real facts to determine if a reverse mortgage is right for their situation.  Don’t go the plumber for your health problems.  And don’t go to the media, politicians, a real estate agent, your neighbor or anyone else who doesn’t specialize in reverse mortgages for you to make an educated decision about reverse mortgages — learn the facts from a true reverse mortgage expert.

Retired woman enjoying the security, independence, dignity, and control of her reverse mortgage

Having the facts my borrowers are thrilled with their reverse mortgage.  I’ve been told, “You’re an angel.”  “You gave me my life back.”  And as Sylvia, wrote:  “As a senior citizen, I had been having some concerns with my finances. Being on a limited income made much needed household repairs and property tax payments very difficult to meet.  I was going to have to make a choice soon about whether to continue to live in my house, or move on to an apartment.  The costs of continuing to live in my home were getting beyond my means, but I wasn’t ready to leave the home that I had raised my children in.  I decided to use the equity in my house to make life easier and meet the financial obligations that I had.  Beth Paterson was my representative.  She was so easy to talk to and walked me slowly through the entire process.  She was always there to answer any questions that I had, and continues to even long after the closing!  It was a wonderful experience.”

Base your decisions on what you know from a reverse mortgage expert, not what you or others don’t know.

© 2009 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link:  http://wp.me/p4EUZQ-3F

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Reverse Mortgages Help Celebrate Independence

Flag-USJuly 4th we celebrate Independence Day in America honoring the day our country signed the Declaration of Independence.  Signing the reverse mortgage documents is a way for seniors 62 and older to sign their own declaration of independence.

Independence is defined as “freedom from the control, influence, support, aid, or the like, of others.”  This fits senior’s attitudes, they want to maintain control of their life, make their own decisions and not depend on others for assistance.  They may be short funds for maintaining their lifestyle and sometimes they will eat cat or dog food because it is cheap and they do not want to rely on their children.  Yet I’ll hear, “I want to leave my house as an inheritance to my children.”

Let me share a story of one of my clients, I’ll call them Ted and Anna.  He was 91, she was 87.  Being proud, they didn’t want to discuss their financial situation.  However, their son-in-law finally talked to them about doing a reverse mortgage.  When I met them and we started the reverse mortgage process, the children and I were told they were doing the reverse mortgage so they could put new linoleum on their kitchen floor.  Once the loan was closed I was informed by their children that they had indeed put in the new linoleum along with new windows and they bought some new furniture.  The kids were going to Ted and Anna’s and were told, “Don’t pull in the drive way, we just had it blacktopped.”  When Ted and Anna went out to eat with their kids, they could pay for their kid’s meals too making them feel good that they could treat their children to a meal.  Then one day the mother and daughter were sitting at the kitchen table and mom shared that before their reverse mortgage they used to go 3 days at the end of month without food or even milk because they would run out of money from their Social Security.  As they were sitting there and looking at the paper, mom exclaimed, “Look, Depends are on sale, I can now stock up.”

While Ted and Anna were too proud to let their children know their financial situation and they didn’t want to depend on them to assist with their living expenses, once they signed the reverse mortgage documents they kept their independence and had funds for their needs and desires.  This also improved their dignity.

Unfortunately while not wanting to rely on their children and wanting to leave their home as an inheritance to their children, seniors are doing without.  This isn’t what their kids want – they don’t want their parents doing without so they can have an inheritance.  Kids actually want their parents to have funds to remain independent.

Then we have the kids who are taking care of their parents by paying for groceries, meals when they go out, paying their bills, taking time from their busy schedules to clean their house, and helping meet their other needs.  This can have a negative impact on these kids’ finances.  Yet their parents don’t want to use the equity in their home and do a reverse mortgage now just so they can leave an inheritance for these kids.  In essence the kids are using their funds to take care of their parents now in exchange for an inheritance after their parents are gone.

Neither one of these scenarios make sense.  Why be insistent on leaving an inheritance to the kids while you’re doing without now?  Why depend on your kids and use their money to take care of you today so you can leave them an inheritance?  They want you to have your independence now and they aren’t looking for the inheritance when you need to funds now.  Actually the best inheritance you can leave your children would be to take care of yourself so they don’t have to worry about you.Celebrate with a reverse mortgage

Improve your cash flow during your retirement – sign your own Declaration of Independence with a reverse mortgage – then celebrate your independence.

© 2009 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link:  http://wp.me/p4EUZQ-3l


Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.