By Alain Valles, CRMP, MBA, CSA
Things that keep us up at night
The ramifications on the world economy of Britain leaving the European Union, increasing tensions between China and Russia, a contentious Presidential election, terrorism, the ongoing Middle East crisis, and the global warming debate. All are examples of events that we have little control over but are causing tremendous concerns.
These external events combined with our personal health challenges, the ever increasing cost of living, higher real estate taxes, and trying to make ends meet on a fixed income are causing quite a bump in the night. It’s no wonder we are stressed!
Why a reverse mortgage may be a solution
I don’t know if a reverse mortgage can solve a global crisis. But I have first-hand knowledge that reverse mortgages have been the solution to immediate and future cash flow needs for hundreds of people. For eligible 62-year old or older homeowners, reverse mortgages give the opportunity to access a lump sum of tax-free cash, receive monthly cash flow, or have a readily available line of credit if money is ever needed during later chapters of life. All of this comes with the option of no monthly mortgage payments (as long as real estate taxes and insurance are timely and the property is maintained, and certain other guidelines are followed).
This federally insured loan program has been strengthened by the U.S. Department of Housing and Urban Development (HUD) with added protections for the homeowner and a significant reduction in costs for many borrowers. A recent study by the Ohio State University found a remarkable 83 percent of reverse mortgage borrowers were “satisfied” or “very satisfied.”
The same survey found that the top five reasons to consider a reverse mortgage are:
- Everyday expenses
- Pay off a current mortgage
- Pay off other debts
- Home improvements
- Financial help to family
In my experience there are a myriad of other reasons, including health crisis expenses, loss of income from no longer working or the passing of a spouse, funds for at-home care, a new car, and fun activities like taking a trip or just dining out once in a while.
Reverse mortgages are better than sleeping pills
But I believe the most overlooked reason to obtain a reverse mortgage is simply this: peace of mind. Hopefully all is financially well for you, but you have nagging concerns about outliving your savings or anxiety about the “what ifs” that might require money, a reverse mortgage line of credit may be the answer to giving you the comfort of knowing that you’ve done your best to cover life’s unknowns.
That has been my experience, but reverse mortgages are complex and every borrower’s situation and goals are unique. Talking with a knowledgeable professional is the first step to learning if a reverse mortgage is right for you. Better yet, give me a call or email to receive the free 36-page “Use Your Home to Stay at Home” which is the official federally approved consumer booklet for those considering a reverse mortgage.
Alain Valles, CRMP and president of Direct Finance Corp., was the first designated certified reverse mortgage professional in New England. He can be reached at 781-724-6221 or by email at [email protected].