Reverse Mortgages - Options for Seniors to Consider

By
Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI

senior pic

Many myths and prejudices surround the topic of Reverse Mortgages.  While it is true that these types of loans are not for every senior, in some instances they can provide well-needed benefits to some.  With the consultation that is required for seniors thinking of utilizing this form of lending, seniors and their caregivers should be well-versed and educated about the benefits and drawbacks associated with their loan by the time a decision is to be made. 

Following is a short synopsis and outline of many of the features of these loans.  If you or a loved one of yours is of this age and you wish to plan for the future, please take the time to read and consider the information contained.  The next step is to contact a qualified mortgage banker for clarification of any questions you have and additional information you require.  Special certification is required to provide this type of loan, so make sure that you are working with someone that has the necessary education and certification demanded.   

If you are 62 years of age or older, own your own home and reside within that home more than one-half  of the year, you may be eligible for a Reverse Mortgage. 

  • Reverse Mortgages eliminate & payoff monthly payments or debt
  • Reverse Mortgages never include monthly payments
  • Reverse Mortgages are for those 62 yrs. & older
  • Reverse Mortgage-holders retain title/ownership of home
  • Reverse Mortgage-holders can receive a monthly, lump sum, or combination payment 
  • Reverse Mortgages DO NOT interfere with inheritances
  • Reverse Mortgage consultation is FREE                    

Reverse Mortgages turn the value of a home into cash without making a move from the owner's  home necessary.   No income is needed from an applicant in order to qualify for a Reverse Mortgage. No monthly repayment of the loan is scheduled or needed.  Cash proceeds received from a Reverse Mortgage can be paid out in several ways to a senior home owner.  A one-time lump sum cash disbursement can be made. 

A monthly "payment" advance or an account with a "creditline" are also options from which to choose and offer flexibility of timing and dollar disbursement amounts.  A combination of payment methods is possible and an option for consideration.  Typically, Reverse Mortgages are repayable upon death, the sale of the home, or permanently moving from the home.              

Many older Americans are concerned about their relatives/caregivers migration to distant locales, increasing personal health issues, rising health care costs, financial legacy and estate taxation.  Reverse Mortgages can provide alternatives and solid solutions  to address many of these important concerns.  For older children involved in the care and management of aging parents or relatives, the utilization of a Reverse Mortgage option can provide welcome financial and personal assistance to a family and budget stressed by health and monetary concerns.  It can also make it possible to keep a loved one within their familiar and well-loved family home when it would be impossible to do so otherwise. 

For seniors with health concerns, the flexibility, benefits and peace-of-mind reaped by securing this type of loan can be enormous.  The usage of Reverse Mortgage proceeds can become a key component to estate planning.    Seniors, or their caregivers, considering a Reverse Mortgage should consult with a qualified tax advisor, financial planner and their professional mortgage banker to discover their best individual and   personal financial options and benefits. 

                            "Mortgage Update & News"  -  Gene Mundt, Chicago Bancorp        www.genemundt.com

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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Isaac E. Chavez 03/06/2009 08:22 AM
  2. D B 03/06/2009 11:55 AM
  3. Tim Bradford 03/09/2009 12:15 AM
Topic:
Lending / Financial
Location:
Illinois Will County
Tags:
mortgages
lending
benefits
seniors
certification
reverse mortgages
assistance
caregiving
estates
real estate
home sales
homes

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Rainer
51,106
Omega Omega
Omega - Glendale, CA

Hey Big Gene - when the next round of things go bad......they will start blaming all those who originated Reverse Mortgage as the reason for whatever...........just like they did with all those who originated Option Arms.  It's a solid product with a very specific purpose!!!!!

Keep networking!!!!

Cheers

Mar 06, 2009 08:13 AM #2
Rainer
86,739
asdf zcxv
Keller Williams Realty - Ann Arbor, MI
Ann Arbor Area Real Estate

Remember it is only for those who have equity in their homes.  I attended a community event and a senior was hoping for pie-in-the-sky.  No equity on her home and a very sad attendee.

Mar 06, 2009 08:19 AM #3
Rainmaker
593,907
Neal Bloom
Brokered by eXp Realty LLC - Weston, FL
Realtor CRS-Weston FL Real Estate

I'm not sure of all the specifics but my attorney told me she had trouble with one where the senior died and the family member was stuck paying it back after the senior took out all the equity from it.

Mar 06, 2009 09:06 AM #4
Ambassador
1,118,646
Russ Ravary ~ Metro Detroit Realtor call (248) 310-6239
Real Estate One - Commerce, MI
Michigan homes for sale ~ yesmyrealtor@gmail.com

the only sad part of reverse mortgages is the fees they charge the old people.  Too much in my opinion

Mar 06, 2009 11:05 AM #5
Rainmaker
2,387,550
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

Someone mentioned blame and that i sprobably closer to the truth. Mortgage people will be accused of taking advantage of the elderly.

Mar 06, 2009 12:41 PM #6
Anonymous
jim

are you at realestateloans.com yet?

Mar 06, 2009 12:51 PM #7
Rainer
148,974
Aaron Poling
Long & Foster - Martinsburg, WV
Working to get YOU the BEST Deal!

I agree that this isnt the right option for all seniors but this is a great program for some. Reverse morgages have a bad stigma to those who dont understand them. Too many people think they are some scheme to take someones house.

Mar 06, 2009 01:00 PM #8
Rainmaker
564,004
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

Good info Gene thanks, but these mortgages still scare me.

Mar 06, 2009 03:33 PM #9
Rainer
53,587
Gerald ( Jerry ) Santoro
Bayshore Mortgage Funding - Morganville, NJ
Mortgage Broker/Mortgage Banker

I agree with you Gene, there are still misconceptions surrounding "Reverse Mortgages". They can be extremely useful for estate planning and/or long term care. It is imperative that the senior citizen, and any interested children or other family members,  have a clear understanding of the pros and cons and are completely comfortable before moving forward. there is still some negativity surrounding these loans from the early days of their conception. There are many safeguards in place now and the available products are quite useful for many situations, as you noted above. There is also a mandatory session from a unbiased, State approved counselor prior to even taking an application.

Interested parties can gather much information from the web from organizations such as AARP or the the NRMLA to help in the decision making process.

Mar 06, 2009 04:24 PM #10
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Hey Gene, You don't mention the difference in a plain vanilla bank Reverse Mortgage and the FHA/HUD guaranteeed Reverse Mortgages. FHA version are the only ones that are fully guaranteed for default to protect the seniors and their estate in perpetuity. In the event of negative equity occuring the senior(s) can continue to live in the home and walk away when they like without owning a dime. I know a former financial advisor in California whose job it is (karma) to foreclose on the estates of seniors whose properties lost value against the note of those not FHA/HUD guaranteed.

I think it's important to point out the different programs exist. The state of Washington has outlawed all but FHA Reverse Mortgages due to predatory and abusive practices of some the the televised programs hyped by bankrupt hollywood icons.

Mar 06, 2009 05:42 PM #12
Ambassador
2,758,551
TeamCHI - Complete Home Inspections, Inc.
Complete Home Inspections, Inc. - Brentwood, TN
Home Inspectons - Nashville, TN area - 615.661.029

I have heard both pros and cons about reverse mortgages. I still want to learn more about the program... 

your building consultant for life in the Fairview, TN area

Mar 06, 2009 07:29 PM #13
Rainer
55,585
Sean Dreznin
NAI Tampa Bay - Sarasota, FL
Commercial Investment Real Estate Agent

Gene,

I can certainly appreciate another investment vehicle which is working to aid our economy and help people as well.  Obviously, reverse mortgages are going to have a negative stigmata as they can be fraudulent and often unscrupulous agents/brokers/dealers are pitching them.

I do not deal with them, and have no plans to ever deal with them, so I must not cross a line in commenting as I am no where as familar with them as I am sure your experience warrants.

I would like to see you provide a list similar to the one you provided above, detailing the "CONS" of reverse mortgages, rather then the company line, advising counseling.

Thanks 4 posting.

Sean

Mar 07, 2009 12:04 AM #14
Rainer
60,099
Norma Brandsberg
Marks Realty Co. Inc., Lynchburg, VA, 540-586-9496 - Forest, VA

Have you ever considered using this information as an Internet seminar using Facebook to get listings from these older seniors when they get ready to sell?

Mar 07, 2009 12:43 AM #15
Rainmaker
1,235,375
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Received various responses to my blog regarding Reverse Mortgages, most positive or questioning in nature.  I want to make it clear, there are differing types of these mortgages out there for seniors to investigate and utilize.  I only do FHA Reverse Mortgages, as they offer rigorous protections and the most complete education and pre-qualifying enforcements available.  Because of the very concerns that were mentioned in responses, I take this route. 

To further protect a senior looking into this nature of lending, I always ask that they have someone, whether a relative, friend, or counsel to accompany them during any portion of the process.  That way there are two sets of ears or more hearing and viewing the information provided.  I urge them to ask questions and seek additional avenues of information, as well.  That way they are assured that what they are hearing and receiving from me is factual and contains all the information, pro and con, that they need to make an informed and intelligent decision.

It is important that the myths and erroneous information surrounding these loan be confronted, as they do provide answers and benefits for some senior citizens.  And as pointed out, the truth of the cons of these loans needs to be addressed also.  The costs need to be laid out, evaluated and weighed.

I urge anyone that is interested to do some research regarding these loans, whether it be through myself or someone else.  I am always available and happy to answer any questions or concerns you or your loved one may have. 

I do strongly urge you to start by informing yourself with the FHA forms of Reverse Mortgages.  As I stated above, they provide many safety nets for seniors and their families and are a good place to start in the processing of educating yourself regarding these loans.

Best of luck ... and thank you for the comments!                     Gene Mundt

Mar 07, 2009 02:46 AM #16
Rainmaker
656,967
Joetta Fort
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder

Great post, and follow up.  I've known of situations where seniors were eating dog food and refused to get a reverse mortgage that could provide them a modest monthly amount to get some decent food but they're afraid.  Plus, they want the kids to have the house when they're gone.  I asked where their kids were now, when they need food.  Tears came to their eyes, but they didn't budge.  I agree that the fees are too high though. These truly are homeowners that need help.

 

I'm going to use a portion of your follow up in my next newsletter, and offer a link to your post.  OK?

Mar 08, 2009 03:19 AM #17
Rainer
55,551
Kelsey Barklow
Hurd Realty - Johnson City, TN
423/948-9154

My mother did a reverse mortgage last summer and received so much less than she would have a couple of years ago but she needed the cash. I suggest that those considering a reverse mortgage weigh their options of doing one now vs. waiting until the market rebounds more. Thanks for the post.

Mar 08, 2009 03:32 AM #18
Rainmaker
131,417
Mike Henderson
Your complete source for buying HUD homes - Littleton, CO
HUD Home Hub - 303-949-5848

Timing is the issue.  If seniors thinking about it can wait a couple of years they will get a huge benefit.  Their home will be worth more (they get more cash) they will be older (they get more cash).

Mar 08, 2009 04:21 PM #19
Rainer
2,630
Michael Gratz
PREA Signature Realty - Saint Louis, MO
St. Louis Realtor & Resident - Sold on City Living

I see nothing here that convinces me that a reverse mortgage is a good way to go. The commentary about being reduced to eating dog food and wanting the kids to have the house further reenforced how lucky I am to have 2 loving adult children living houses thar are quite nice.  Plus I am reasonably certain that I am still welcome at their homes for a meal. Seriously, reverse mortgages are just another device for the banks to make money and a questionable device at that. 

Mar 12, 2009 03:41 AM #20
Rainmaker
1,235,375
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Michael:

Thank you for your post.  You are quite right, you are a lucky man to have a family that would support you emotionally and possibly more should the need arise.  Unfortunately, not everyone is so lucky, nor do they wish or want to take that option.  I am always surprised by the number of seniors that, while having family and family that would possibly be able to help, refuse to ask.  It is obviously their choice, but I cannot help but wonder if their children understand or know of their decisions.

As mentioned within my blogs, this option for lending is not for all to consider or use.  It truly rests upon the individual and their particular needs and case.  Some, simply put, do not have many options to consider.  My job as a lender is to inform and educate my customers and their families to the pros and cons of any loan, then assist them should they decide to move forward.  Thankfully, special opportunities for education and information are available and demanded (with FHA Reverse Mortgages) to move forward. Because of the protections offered, these are the only Reverse Mortgages I offer. 

Again, I am greatful that you have no need for this program.  However, I am glad the programs and the benefits that can be possibly derived from them do exist for those that truly have the need.  If I can answer any questions or concerns you have, please do not hesitate to contact me.

Gene Mundt, Prof. Mortgage Banker                                 www.genemundt.com                         Chicago Bancorp

 

Mar 12, 2009 05:19 AM #21
Rainmaker
1,235,375
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Jim:  I checked out realestate.com and joined as a result of your comment and suggestion.  Thanks for the heads-up ...  it was appreciated.  Always looking for new ways to educate myself and get my name and services known.  If you know of other outlets, I'd appreciate hearing about them in the future.  I will reciprocate to you, as well.  Thanks again.

Gene Mundt, Professional Mortgage Banker                                           www.genemundt.com       Chicago Bancorp

Mar 23, 2009 01:54 AM #22
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Rainmaker
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Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

708.921.6331 - 40+ yrs experience
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