Funding Retirement…With a Little Help From My Friends
While the reverse mortgage changes have already been implemented, there were many seniors who tried to beat the rush beforehand by applying for a reverse mortgage before September 30.
The reverse mortgage has become a secondary source of income for many seniors, who suffered irreparable losses during the Recession, and wanted to live a comfortable retirement without having to completely deplete their savings.
While various news outlets have found it completely acceptable to report on the unethical practices of some companies, or, better yet, the unscrupulous practices of some individuals, it’s nice to see that, for a change, one news source is also sharing success stories as well.
In an article published by Reuters, author Margaret Chadbourn shares various stories from seniors who would have otherwise been between a rock and a hard place if not for the reverse mortgage.
One of these seniors, Cheryl Honeyman, a 63-year -old who had inherited her home from her parents four years ago, after their passing, is thankful she applied for the reverse mortgage when she did:
"I had limited options and was up against a wall. It was grim. I was lucky to get this loan when I did.”
For Honeyman, obtaining a reverse mortgage means that she can live on the money she gets from Social Security without having to worry about unexpected expenses in the future.
In truth, Honeyman’s story is a great example because it demonstrates that not all seniors who apply for a reverse mortgage are financially desperate or “on their last legs.” Honeyman is simply taking measures to prevent any future, unexpected expenses from drying up her savings.
In a sense, this is one of the main reasons the changes to the program are being implemented. By controlling the amount of funds that can be disbursed at any given time, HUD prevents borrowers from overdrawing their equity, initially, and not having enough in the future to pay their financial obligations.
The sudden surge in home values as of late have made conditions ideal for seniors who want to obtain a reverse mortgage or are hoping to refinance a previously existing reverse mortgage.
Alba Moesser, an 84-year-old Hispanic literature professor, who has yet to retire, was able to use a reverse mortgage to supplement her son’s budding business proposal. Moesser, who had taken out a reverse mortgage in 2011, refinanced her reverse mortgage this summer.
With the money she was able to help her son rebuild an apartment complex that is rented out now.
Stephanie Moulton, an assistant professor at Ohio State University stated:
"It was originally intended for those borrowers considered house-rich and cash-poor but now it is increasingly used as a tool for seniors tapping equity lines for broader retirement packages.”
In truth, just because the way we think about reverse mortgages is going to change, doesn’t mean the peace of mind it offers for seniors during retirement will disappear. In fact, it will make the program safer for borrowers who qualify.