There are numerous ways homeowners use their Home Equity Conversion Mortgage (HECM) proceeds. Meet our borrowers. . .
Eliminate Mortgage Payments: Lisa and George** had a small mortgage remaining on their home. It was difficult to make the monthly payments so they did a Reverse Mortgage to eliminate the payments. There was a balance that they left in a Line of credit for future use.
(Borrowers are still responsible for paying property taxes, insurance, HOA Dues & maintaining home.)
Maintain Lifestyle: Helen and Harold did a Reverse Mortgage to afford to take their annual trip to Florida during the winter months. They are thankful they are able to maintain their lifestyle.
Prepare for Emergency: Earl and Ruth did a Reverse Mortgage to be prepared for an emergency if something were to happen to one of them.
Protect Other Investments: To have extra spending money without having to cash out their CDs or other investments, Jerry and Carol decided to do a Reverse Mortgage.
Supplement Retirement Income: Dale and Kevin were two brothers who lived in the home where they were raised. Being both were over 62 and owners of the property, they were able to do the Reverse Mortgage to supplement their retirement income.
Eliminate Mortgage Payments*, Home Upgrades and Line of Credit: Dee and Peter did a reverse mortgage to eliminate their current mortgage payment*, take a lump sum for some home upgrades, receive an extra $300 a month in monthly payments to supplement their Social Security, and still have funds in a line of credit for future use.
Purchase a Car: Bart and Tina wanted to purchase a new car but didn’t have much in the way of savings. With a Reverse Mortgage they were able to purchase a car.
Purchase Hearing Aide and Home Repairs: Joe needed a hearing aide but couldn’t afford it with his Social Security benefits. Rather than taking money from his savings, he did a Reverse Mortgage. He also used some of the money to put new siding on his home.
Pay Family Caregivers: Sam and Frances were both in frail health. Two of their daughters decided to care for their parents rather than hire outside services. Since they had quit their jobs and it was affecting their family’s financial situation, Sam and Frances decided to do the Reverse Mortgage and use the funds to pay their daughters for the care they were providing.
Traveling: Helen was struggling to meet her living expenses with just her Social Security Benefits. She also had always dreamed of traveling. The Reverse Mortgage provided the extra cash she needed and she was able to fulfill her dreams of traveling.
Not Rely on Children: Nancy had accrued some debt including some credit cards and borrowing from her children. She did a Reverse Mortgage to pay off those debts and to have a line of credit available for future needs. She also enjoyed having some extra cash to purchase some things to fix up her home and to go to lunch with friends on occasion. Because her children had their own expenses and needs, they were relieved that their mother had done the Reverse Mortgage and could live more comfortably without relying on them.
Home Repairs: Elaine needed some repairs done to her home. They were more than she could afford on her limited income. She did the Reverse Mortgage to pay for the repairs and to have extra funds for supplementing her income.
Home Health Care to Stay In Home: Robert did not want to go to a nursing home, yet he needed long term care. George, Robert’s son, decided they should do a Reverse Mortgage to pay for the home health care needed to keep Robert at home where he had raised his children. Robert is happy because he is living where he chooses. George is happy the family can fulfill Robert’s wishes of staying in his home and still receive the needed care.
Pay Property Taxes: Dorothy was behind on her property taxes and facing losing her home to the county. She did the Reverse Mortgage, paying off her back taxes and setting up a Life Expectancy Set Aside (LESA) to pay her future property taxes and insurance. She was able to live more comfortably, not depending on her children to assist her.
Pay debts and Have Funds for Future: Bill and Phyllis were preparing for the future. They did the Reverse Mortgage to pay off their current mortgage*, the credit card debts, and to have money in their line of credit. With the money in the line of credit when one of them passes away, the other would be able to change the payment plan to receive monthly payments and continue to live the lifestyle they are currently accustomed to, even without the Social Security of their spouse.
Funds for Everyday Living Expenses: Phil became a “new man” since the Reverse Mortgage was done. He now goes out to eat with his friends and works in his yard.
Every Day Living Expenses: Frank and Emma, a vibrant 90 and 86 year old couple, found that each month they were short money to even buy milk. Their son-in-law and daughter assisted them in obtaining the Reverse Mortgage. They are so pleased that they now can live more comfortably. They used the proceeds to receive monthly payments to supplement their Social Security. They also took out a lump sum to fix up their home and left enough in their line of credit to use as future needs arise.
Payback Family Loan: Prior to learning about reverse mortgages, when Mabel couldn’t afford her mortgage payments she borrowed money from her son. When her son needed the money back, once she learned about reverse mortgages she was able to repay him. With her son paid off, and with no monthly mortgage payments* she was greatly relieved, felt less financial pressure, and had peace of mind knowing she didn’t owe him money and could remain independent. During the reverse mortgage process she consulted an elder law attorney. As a result she now has a will, power of attorney, and her health care directives in place.
Home Health Care: A reverse mortgage allowed Margaret, who had just been released from the rehab center and needed a home health care aide to assist her, have the funds for the care so she could remain in her home.
Purchase a New Home: Mike and Carol decided they needed a 1 level home to fit their changing health needs, they used the Home Equity Conversion Mortgage HECM for Purchase to purchase their new home instead of using conventional financing.
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Contact us if you are in Minnesota. As your local broker, we work with several lenders and provide free information and facts with no obligation, meeting in person whenever possible.
When you decide to do a reverse mortgage make sure you work with a local originator or loan officer who specializes in reverse mortgages, has years of experience and knowledge in reverse mortgages in your state, preferably holds the Certified Reverse mortgage Professional (CRMP) designation, licensed in your state, is a broker, working with various lenders, and is willing to meet with you to review the details, before the application, during the application and at closing.
I would caution about working with an originator from another state who is mailing all the documentation, including the application and not “meeting” with you to explain and review what you are signing. (The lenders in another state may send a notary for application and/or closing – they are not licensed mortgage brokers so can NOT answer questions, they are there only to verify your signature.) Ask for references and find out if the loan originator will be there for you even after the loan has closed. If you feel pressured, call another originator. You can find a list of questions to ask an originator at our webite: www.RMSIDAC.com.
To ensure that borrowers understand reverse mortgages HUD requires anyone doing a reverse mortgage to complete counseling through a third-party. They will review the program and discuss other options that may be available.
*Borrowers are still responsible for paying property taxes, insurance, HOA Dues & maintaining home.
**Borrowers’ situations are real; borrowers’ names changed to protect their identity.
© 2017 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648
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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.
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