By Alain Valles, CRMP, CSA, MS, MBA
(Photo Alain Valles, Photo submitted)
Many have heard the words “reverse mortgage,” but few have a clear understanding of how it works, the cost, the benefits or the process. As managing director of the 501(c)(3) nonprofit Helping Hands Community Partners, Inc., our mission is to educate people about senior housing options and, when appropriate, arrange a reverse mortgage for qualified individuals.
The first step is to get the facts. We have the most experienced, licensed professional loan officers with the arduous Certified Reverse Mortgage Professional (CRMP) designation of any nonprofit in New England. A great place to get information is the free How to Use Your Home to Stay at Home 36-page book. This is the official reverse mortgage consumer booklet approved by the U.S. Department of Housing & Urban Development and published by the National Council on Aging.
To understand if a reverse mortgage is right for you, we must discuss three uncomfortable questions:
- Your home condition
Part of the application process is obtaining an appraisal. The amount of reverse mortgage proceeds is subject to the value and condition your home. Websites such as Zillow may give a higher value than an appraisal because of deferred maintenance issues such as missing roof shingles or rotting siding. Safety issues such as missing railings or a broken brick walkway will result in “items to cure” before the reverse mortgage can be finalized.
Many homeowners who can’t afford the repairs mistakenly assume that they can’t obtain a reverse mortgage until all issues are fixed. However, there are options that allow you to use reverse mortgage funds to make the repairs.
- Your finances
The second uncomfortable topic is your finances. We must review your sources of cash flow such as employment, Social Security and pension funds. We also must look at your credit history, including if you’ve been able to pay your real estate taxes and homeowner’s insurance on time for at least the past two years.
For many, it is hard to admit that lifelong financial plans did not work out as hoped. This is even harder to talk about when one spouse had the financial responsibility while the other is unaware of their situation. Often, the financial pressure is caused from events outside of their control, such has a health challenge or job loss. We respectfully review the facts and work together on a plan. In some cases, the solution is for the reverse mortgage lender to pay the real estate taxes and insurance for the anticipated life expectancy, thereby minimizing the risk of the homeowner falling behind.
- Your mortality
If one knows their passing date, then it’s mathematically easier to manage one’s money. But even if Google claims it can predict that date, most people would prefer not to know. The challenge is making sure one does not out-live their savings.
The proper use of a reverse mortgage can minimize this risk. The hope is that you’ll never need to access the reverse mortgage funds and have peace of mind that it’s there in case of emergency.
Contact us with any questions and to receive your free copy of “How to Use Your Home to Stay at Home.”
Alain Valles is Managing Director of Helping Hands Community Partners, Inc. and was the first designated Certified Reverse Mortgage Professional in New England. He obtained a Master of Science from the M.I.T. Center for Real Estate, an MBA from the Wharton School, and graduated summa cum laude from UMass Amherst. Alain can be reached directly at 781-724-6221 or by email at [email protected]. Archives of articles from previous issues can be read at www.fiftyplusadvocate.com.