By Alain Valles, CRMP, CSA, MBA
If you are like many seniors you may wake up feeling financially stressed. Concern about having enough money, worry about a lingering home repair, or frustration with credit card or real estate tax payments can be a burden. Even worse is the fear of not having enough money if something should happen in the future.
These worries, combined with the desire to be financially independent while remaining in one’s home, has led many to ask, “Is a reverse mortgage right for me?”
The only honest answer is, “It depends.” It depends if you qualify. It depends on your goals. Every person’s answer is different.
The questions asked to see if you qualify for a reverse mortgage are simple:
- Age (one person must be at least 62 years of age)
- Home value and condition
- Current mortgage balance (if any)
- Is your home in a trust?
- Credit history (perfect credit is not always required)
- Income sources
However, just because you qualify does not mean you should get a reverse mortgage. Important questions to ask include:
- Do you want to live in your home long term? Or might you move within five years?
- Is there a current monthly cash flow shortfall?
- Do you have a mortgage or equity credit line balance?
- Are you working? When do you plan to retire?
- Do you have lingering credit card balances?
- Are real estate taxes draining your savings?
- Have you been faced with the loss of a partner’s income due to death or divorce?
- Are home repairs needed? Improvements desired?
- Is your house in a trust or a life estate?
- Do you own other real estate?
- What happens if someone must enter a nursing home?
- Have there been temporary or ongoing costly health events?
- What will you do if you do not qualify?
- Would knowing you will have access to cash for later chapters in life give you some peace of mind?
- Do you wish you could have just a little bit more money to better enjoy life?
Almost everyone has heard about a reverse mortgage but only a tiny percentage of people have invested the time to understand the mechanics of how they work and answer the above questions. Generally, a 10-minute phone conversation will determine if you qualify and then a one-hour meeting will answer other questions.
The key is getting the facts. There is a great deal of misinformation circulating about reverse mortgages. TV infomercials and free seminars are used as methods to capture your name to be sold as a lead.
The only federally approved consumer booklet, “Use Your Home to Stay at Home,” is published by the National Council on Aging and is an excellent place to start. Call or email me and I’ll forward a free copy to you and help you begin to determine if a reverse mortgage is right for you.
Alain Valles, CRMP and President of Direct Finance Corp., was the first designated certified reverse mortgage professional in New England and is the leading licensed loan officer in Massachusetts. He can be reached at 781-724-6221 or by email at [email protected].