By Alain Valles, CRMP, MBA, CSA
Reverse mortgages have been around since 1987 and have helped hundreds of thousands of older homeowners to live in their homes and have access to cash. Reverse mortgages are the most heavily regulated loan program in the country with periodic government changes to continue to strengthen the program.
Yet there continues to be confusion and misinformation on how a reverse mortgage works. Even worse are well-meaning but uninformed friends and family members who have discouraged older homeowners from even considering a reverse mortgage resulting in a lower quality of life. Unfortunately, not knowing the facts has led many seniors to making less than optimum home financing and retirement decisions.
Every person is entitled to receive factual and accurate information about reverse mortgages to help make the right decision about their unique retirement plans, homeownership goals, and options to having sufficient tax-free cash for life’s unexpected challenges. There is nothing harder to overcome than the regret of a missed opportunity to have a better life.
But deciding if it makes sense to get a reverse mortgage can feel overwhelming. And not having the right information leads one to make a decision solely on emotions instead of facts. Below are four tips to learning if a reverse mortgage is right for you.
Tip 1. Identify your financial & housing goals
Ask yourself: “If I had a magic wand, what is my ideal scenario if I obtained a reverse mortgage?” Quite often there is an immediate need for more cash each month to pay off a mortgage, get rid of credit card debt, or make home improvements.
Other seniors are in financial balance today but are worried about having enough cash down the road, often fearful that they will outlive their investments, or face an unexpected health crisis.
Find a quiet moment to reflect how you want the next 10, 20, 25 years and beyond to look like. Though it may feel a bit uncomfortable, if you’re married or have a significant other, you should both discuss your future wishes and concerns and how they will be funded.
Tip 2. Get the facts
Many websites and TV infomercials are just methods to capture your name to be sold as a lead. A good start is to receive the 36-page official reverse mortgage consumer booklet approved by the U.S. Department of Housing & Urban Development (HUD) government called “Use Your Home to Stay at Home.” This is an excellent starting point to learn more about reverse mortgages. Feel free to contact me to receive a copy with no cost or obligation at 781-724-6221.
Tip 3. Talk with your trusted advisors
You are encouraged to invite your family and advisors to be a part of the learning process. However, regardless if the advisor is a financial planner, an attorney, or your adult child, very few people understand the pros and cons of obtaining a reverse mortgage. I always recommend having a group meeting where I will explain everything in detail.
Tip 4. Make a decision
Hoping things will magically get better usually results in more financial pain. Waiting might lead to regret. Sometimes deciding to sell and downside or rent is a better choice. The key is to be proactive and seek accurate information to make the best decision for you.
Please take advantage of my decades of educating people about the good and bad about reverse mortgages and give me a call or email.
Alain Valles (CRMP, MBA, CSA, 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].