By Alain Valles, CRMP, MBA, CSA
Almost a million people have obtained a reverse mortgage to help achieve their personal and financial goals, and an additional 20 million homeowners may be eligible. Almost everyone has heard of the term “reverse mortgages,” but few really understand the pros and cons. Where does one start?
- 1. Gather information from trustworthy sources.
With so much news about “fake news,” be cautious of where you get your information. Here are two sources to consider:
- *“Use Your Home to Stay at Home” is the official 36-page reverse mortgage consumer booklet approved by the U.S. Department of Housing & Urban Development (HUD). This is an excellent overview of the challenges of aging in place and can help you understand:
- Does your home meet your needs?
- How does a reverse mortgage work?
- What other housing options do you have?
- *“Reverse Mortgage Self-Evaluation: A Checklist of Key Considerations” is available from the National Reverse Mortgage Lenders Association at no cost. NRMLA’s publication poses seven questions and highlights important considerations:
- How do you intend to use your reverse mortgage loan proceeds?
- Do you fully understand your obligations as a borrower under a reverse mortgage?
- If you are married, will your spouse be a co-borrower on your loan?
- How will your reverse mortgage loan be repaid?
- Do you receive assistance under any government programs that are based on your current income?
- How long do you, and your spouse, plan to remain in the home?
- Have you considered other strategies to supplement your retirement income?
3. Both publications will lead to more questions, but will also help prioritize what is most important for you. To receive both free copies, just email me at [email protected] or call 781-724-6221.
- Speak with an experienced, licensed reverse mortgage loan officer, preferably one with the highest designation in the industry: Certified Reverse Mortgage Professional (CRMP).
The objective is to apply the broad view information you’ve received to your unique situation and goals. A few straightforward questions such as your age, home value, balance on any current mortgage, income, and credit will help determine if you qualify, and if a reverse mortgage is the best way to meet your needs.
- 4. The last step before one applies for a reverse mortgage is to complete a required reverse mortgage counseling session.
In Massachusetts, this is a one-on-one in-person meeting with a HUD and Massachusetts Executive Office of Elder Affairs-approved independent counselor. The primary goal of the counselor is to make sure you have a good understanding about the merits of a reverse mortgage.
- Assuming all goes well, you would provide requested documentation and your application would go into processing.
Processing times vary but a typical time frame is about 45 days from the time you complete counseling to the time funds are available.
Space is limited here to go into any meaningful detail so feel free to email or call me to have an educational discussion about if a reverse mortgage is right for you.
Alain Valles, CRMP is president of Direct Finance Corp., and a Certified Reverse Mortgage Professional. Alain can be reached at 781-724-6221, or via email at [email protected].