By Alain Valles, CRMP
I was recently at a local charity event and invariably people asked what I do? My answer is always “I save financial lives by educating people about reverse mortgages and, when appropriated, arrange them.” That’s usually followed by a polite sigh and then the person stating: “Aren’t those bad? Doesn’t the person lose their home to the bank or government? Don’t the kids lose their inheritance? Don’t you have to have no mortgage? Isn’t a reverse mortgage a last resort?” In other words, they’re really asking “Aren’t you just taking advantage of old people?”
The emphatic answer to all of the above questions is “NO.” In fact, the new and improved government insured reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM), has been strengthened and allows qualified senior homeowners to convert illiquid home equity into available tax-free cash for immediate or future use. When used properly, a reverse mortgage may be the solution to living an independent fulfilling life. But lack of understanding has led to many misconceptions including the following:
- “I will lose my home.” With a reverse mortgage, you retain full control and ownership of your home. As long as you continue to pay your real estate taxes, homeowner’s insurance, maintain your property, and meet other guidelines you may remain in your home for the rest of your life or sell your home at any time with no prepayment penalty.
- “I can’t afford to make monthly payments on a reverse mortgage.” For qualified borrowers, the unique aspect of a reverse mortgage is there is no requirement to ever make a monthly mortgage payment. This is considered the magic feature of a reverse mortgage because you may receive a lump sum amount of cash, a monthly check for life, or a line of credit to be used if ever needed with no monthly payment!
- “I won’t qualify because I have a mortgage on my home.” There is no requirement for your home to be free and clear. Many seniors currently have a mortgage. A large percentage of those people are struggling to make the required monthly payment which is affecting their quality of life.
- “Only someone who is ‘cash poor’ needs a reverse mortgage.” Nothing could be farther from the truth. Even if you have no pressing need for cash or monthly tax-free income, a reverse mortgage is a credible estate planning tool to protect against unexpected life events such as a health challenge or a family emergency cash request. Having a reverse mortgage line of credit in place gives peace of mind that one is prepared for the unknown.
- Many other myths. The list goes on. So, become better informed. Call, text, or email me for your free copy of the consumer booklet published by the National Council on Aging called, “Use Your Home to Stay at Home.” And lastly, with no obligation, I’ll also be happy to give you various scenarios for your situation.
Being better informed will allow you to trust deciding if a reverse mortgage is the best solution for you. You’re invited to call me at 781-724-6221 and I’ll be happy to answer all your questions.
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] or visit www.dfcmortgage.com.