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Why Not A Reverse Mortgage?

Before you say no to a reverse mortgage perhaps you should find out what “it” is and if there is value to be considered.

There is nothing magical, shady, onerous, or devious about this loan product. You don’t give up ownership of your home. You don’t leave your family in financial peril if your loan surpasses the appraised value. By the way, this is why you and/or your family should spend time with a reverse mortgage professional. Ask any and all questions – don’t stop until these questions and concerns are satisfactorily answered.

There is only one reverse mortgage. There are multiple reverse mortgage options when considering equity distribution. Remember this: it is your money and with careful consideration it is ultimately your decision on how and when you choose to receive these funds.

Let’s start at the beginning. HECM (Home Equity Conversion Mortgage) is the official name for the reverse mortgage. Most seniors know this loan by the term “reverse mortgage”. Instead of you paying the mortgage, the equity you have in your home pays you. There is no reason to go into the detail of how the payments or funds are received because the amounts available are tied to three distinct conditions. Those conditions are: age of the youngest borrower (must be at least 62 years of age), interest rate of the loan product, and the equity position based upon appraised value.

The most critical aspect of considering a reverse mortgage for the majority of seniors are what do the children think about the possibility of not receiving any funds upon the passing of the parent? Most children believe that it is more important for the parent to be financially stable and free of unnecessary stress. Getting older is a fact of life. Getting older and having difficulty making ends meet does not and should not be a factor if you have the capacity/equity to help ease the stress of having to stretch every dollar.

Some believe that they do not need a reverse mortgage. Dealing with these seniors is different. Let’s put it this way, there are those that need the loan because it will lighten the load for them and possibly their children. There are those that have been watching their 401k become something less than what they anticipated and the funds they were counting on are not as robust as originally calculated. The equity in one’s home is decreasing because of reduction in values. Even if you have no mortgage on your home are you taking advantage of that equity? Perhaps the education process is the place to start.

By Stephen Hurley, Reverse Mortgage Professional, Affordable Interest Mortgage 720.895.0500 or s.hurley@aimortgage.net