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How to Determine if a Reverse Mortgage is right for you.

I would like to comment on this Washington Post article to put aside the guess work and focus directly on what a reader or potential homeowner should realistically expect from a reverse mortgage given this situation.  Here's the facts.  The problem cited was that the homeowner has fallen behind on their property taxes.  This occurrence within the past two years will trigger a LESA.  This is an automatic escrow or otherwise termed “life expectancy set aside” for applicable real estate taxes and insurance.  This will consume a significant portion of the otherwise available principle limit depending on age.  The older the homeowner, the more equity access; so age would play a critical role given a secondary objective of supplementing income.  Regardless, a reverse mortgage in this situation would provide stability because the LESA would provide the required funds to pay the real estate taxes as due and keep the home insured.  This would allow the homeowner to stay in their home.  Yes, selling is always and option but then you have to ask which is the lesser of the two evils when someone is in a distressed situation. No one likes getting a restricted approval with a reverse mortgage that requires a LESA, but living in a home and solving the money problems versus selling and having to come up with a new plan in unfamiliar territory, you have to ask yourself which makes the most sense.  In this scenario, I would vote for the government insured HECM reverse mortgage as the solution that would allow the homeowner to stay in their home until the end of their natural life.  This assurance does not come with selling.  

For further information on the affects of the Financial Assessments and LESA, feel free to read my previous reverse mortgage blogs.

https://www.jeffersonreversemortgage.com/blog/5960/retirement-planning/are-you-eligible-for-a-reverse-mortgage

https://www.jeffersonreversemortgage.com/blog/5755/retirement-planning/the-state-of-the-lesa---hecm-reverse-mortgages


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

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