I work in the reverse mortgage field because I love what they do for people. Reverse mortgages really makes a difference in their lives. I know because my clients tell me. And I feel it’s important to educate and inform because for some reason, reverse mortgages are a target for misconceptions and down right false statements. First of all people seem to love to give financial advice on this particular program, even if they don’t know a thing about it. They use words like.. don’t do it… the bank owns your house, your kids won’t get anything.. I advocate education and evaluation and stop the ill-gotten advice givers in their tracks. Maybe they don’t want a reverse mortgage, fine, but spreading incorrect information and giving unwarranted financial advice is wrong. I want the people I work with to help in this mission of encouraging people to evaluate the program for themselves. What a shame when a person could really benefit from a reverse mortgage and they don’t even look into it because of some loudmouth’s harsh words.
Let’s take a look at how the reverse mortgage works. Older homeowners can borrow against the equity in their homes without having to make monthly payments. Funds are advanced to the borrower and interest accrues, but the outstanding balance isn’t due until the last borrower leaves the home, sells or passes away. Now let’s look at an older couple who is making mortgage payments. They are pulling money out of their 401k (paying taxes on it) and paying it into their mortgage payment. They may even be putting their social security income into a taxable status because of the investment draws. Instead of spending down investments that may otherwise grow, spend down equity with a reverse mortgage. Having a mortgage on your home doesn’t affect appreciation. And you’re protecting yourself from further depreciation as you have secured the equity at the current value. If you set up a line of credit and ‘let it ride’, the growth in the line of credit could exceed a depreciating home value and you could conceivably draw more than the home is worth at some point in the future. I have clients in that position currently, with a credit line higher than the home value.
I visited one of my clients after she had completed a remodeling project she did by using some of her reverse mortgage proceeds. She proudly pointed to her new granite countertops and said, “I polish my equity every day”. Another who was able to purchase a new home with a reverse mortgage and live near her daughter and grandchildren. It made such a difference in all their lives as she was able to keep the grandchildren at her home after school until their parents came home from work.. Another who used some of the reverse mortgage proceeds to give money for a down payment so her son could purchase a home at an incredibly low price and begin to build equity for their family. Another who was drowning in debt from medical bills and was able to clear it all and begin to regain her health because the tremendous stress was lifted.
I love to help people get reverse mortgages and know that I really helped make a difference in their lives.