Can I lose my house in a reverse mortgage?

By
Mortgage and Lending with NMLS #384936 NMLS #384936

Reverse mortgages, also known as a Home Equity Conversion Mortgage or HECM are a tool more and more people in retirement are considering for a variety of reasons. In fact, reverse mortgages have increased over 20% since 2013.

 

The sandwich generation, defined by Wikipedia as: “a generation of people who care for their aging parents while supporting their own children”, are looking for new ways to leverage financial resources without becoming a burden on the people they are caring for. You may find yourself both a baby boomer and part of this sandwich generation looking to provide for the generation older and younger than yourself.

 

As you enter or approach this time, you may want to consider reverse mortgages as an option. In the past, reverse mortgages have gotten a bad rap, mostly due to the prevailing fraud in the early 2000’s and before. And sadly, since the product is geared for homeowners age 62 and up, it was seniors who were taken advantage of in those darker financial days. Fortunately, the FHA stepped in and has imposed strict regulations on reverse mortgages to make them safer for seniors than ever before.

 

As with any financial product, including mortgages, ethics of the advisor is of utmost importance. Fraud can come in the form of selling products that are not in the best interest of the client, and a seasoned and reputable mortgage broker will point you in the right direction, whether or not that is reverse mortgages. It is important to consider your options and you should never feel pressured into making a quick decision. In fact, we want just the opposite for you- we want you to know the costs, risks, benefits and options upfront. We want to answer all your questions about reverse mortgages, as well as the questions of another trusted person in your life, so you can make the best informed decision.

 

Reverse mortgages are being used to help people 62 and older, who have equity in their home or own their home free and clear, to have a better quality of life. By converting the equity in your home into a tax free income stream, you are able to make wanted lifestyle changes such as purchasing  long term care insurance, protecting your home equity for your children against nursing home expenses or even bridging the Medicare gap from age 62 to 65. The tax free income can allow you to delay your social security benefits and even allow you to keep money invested in other areas that would be taxed or penalized if withdrawn. Also research shows that a reverse mortgage allows people to remain in their home longer.

 

The FHA (Federal Housing Administration) insures legitimate reverse mortgages and not all homeowners are eligible. If you would like to learn more about reverse mortgages and if they are right for you, contact Certified Reverse Mortgage Planner Kevin Guttman today for a free consultation.

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We help Colorado clients finance their dream and

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Kevin Guttman

Certified Reverse Mortgage Planner

Home Finance Advisor

Financing Your Dream

Colorado Springs, CO 80920

877.251.9709

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reverse mortgage
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Rainmaker
1,523,755
Sybil Campbell
Long and Foster REALTORS® 5234 Monticello Ave Williamsburg, Virginia - Williamsburg, VA
REALTOR® ABR, SFR, SRES Williamsburg, Virginia

Hi Kevin Guttman 877-251-9709, This is great information, thanks for the great blog.

Jan 18, 2016 09:32 AM #1
Ambassador
2,301,040
1~Judi Barrett
Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745 - Idabel, OK
BS Ed, Integrity Real Estate Services -IDABEL OK

Kevin, a ton of information there and good stuff about the reverse mortgage... so can a homeowner lose their home with a reverse mortgage?  They do have to occupy the home, is that correct?

Jan 18, 2016 10:41 AM #2
Rainmaker
84,503
Devin Keays
Keller Williams The Marketplace - Las Vegas, NV
MBA

Great post, I've wondered about some of this.. Thank you for the insight. 

Jan 18, 2016 02:21 PM #3
Rainer
268,803
Kevin A. Guttman-Author, ReverseMortgageSpecialist
NMLS #384936 - Colorado Springs, CO
877-251-9709

Judi, they DO have to live in the home at least 6 months a year. They CANNOT lose their home unless they do not pay their homeowners insurance and property tax, which is the same for any mortgage. Thanks for the questions! 

Jan 18, 2016 08:51 PM #4
Rainer
14,852
George Omilan
Jefferson Mortgage Group LLC - Oakton, VA
Your Local Mortgage Professional.

Great blog Kevin.   One thing you did not mention that is a key benefit with a Reverse Mortgage program that no other forward conventional or home equity type of program provides is the growth factor.  The untapped portion of a homeowner’s principal limit will compound annually as they age thereby providing them additional available credit annually.  This is a significant benefit that many simply don't understand.

Feb 02, 2016 12:00 AM #5
Rainer
268,803
Kevin A. Guttman-Author, ReverseMortgageSpecialist
NMLS #384936 - Colorado Springs, CO
877-251-9709

George, it is true that someone with a reverse mortgage can also have a line of credit tied to it that grows automatically 5% a year, despite what happens in the real estate market. This will be a topic for a future blog as it is a "BIG DEAL". Thank you for pointing it out!

Feb 02, 2016 01:16 AM #6
Rainer
14,852
George Omilan
Jefferson Mortgage Group LLC - Oakton, VA
Your Local Mortgage Professional.

Yes.  You are referring to the growth factor.  The untapped portion of the credit line will compound annually at approximately 5%.  The key here is "untapped portion".  I agree its definitely a big deal.  This is a huge benefit that is often over looked.  The HECM Reverse loan is a credit line.  There isn't an additional credit line attached.  I know this is confusing because their is a fixed version and a credit line verison.  I hope this provides clarity.

Feb 03, 2016 05:51 AM #7
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Rainer
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Kevin A. Guttman-Author, ReverseMortgageSpecialist

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