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Should You Take a Reverse Mortgage Now, or Would It Be Better to Wait?

Published on Apr 14, 2016 | Reverse Mortgage Retirement Planning supplemental retirement income HECM Reverse Mortgage Financial Planning Retirement security Eligibility for Reverse Mortgage

Good Huffington Post article that brings up a very important point which I have stressed in previous blogs.  In answer to the title's question, no you shouldn't wait. When a retiree really doesn’t have a comprehensive plan, waiting to take action with a reverse mortgage can be detrimental. With the addition of the new financial assessments last April, the program is no longer geared toward crisis management and eligibility requirements are more stringent. The focus has been changed dramatically to benefit the planners. I have so many clients in the seventies that are in fine health at the moment. They deliberate and drag their feet over the subject of a reverse mortgage. The problem is that when you review their income and their assets many of them are surviving on small fixed incomes and sitting on their home equity. In other words, they have no plan. What happens from here is they encounter a crisis and then they want the reverse mortgage you presented to them last year. If they are fortunate enough to have contained the crisis so it has not adversely affected their credit and other related items then they should still be eligible and in a position to benefit from the reverse mortgage. Unfortunately, that is not the most realistic example. Most people feel the pain of the financial assessments when they reach for the reverse mortgage as their crisis antidote. Many of these homeowners are startled to learn that they are unable to obtain unrestricted approvals and are forced to establish escrows for future taxes and insurance. This measure is called the LESA or life expectancy set aside. Without sufficient home equity to cover this escrow requirement many homeowners will find themselves ineligible for a reverse mortgage while others may feel that their objectives are now clouded by this new requirement and it is no longer feasible. The bottom line is don’t wait. A reverse mortgage can be a terrific addition to a retirement plan, but you have to know that the rules have changed and they are no longer in favor of the homeowner as they were in the past.

 

Click here the full Huffington Post article - Should You Take a Reverse Mortgage Now, or Would It Be Better to Wait? (When Does ‘Watchful Waiting’ Become Procrastination?)

 

George H. Omilan
President-CEO - NMLS# 873983
Jefferson Mortgage Group LLC
Located in Fairfax County, helping seniors with Reverse Mortgages in Virginia, Maryland, DC and Pennsylvania.

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