January 14th, 2016 | Retirement Planning, HECM Reverse Mortgage, Financial Planning, Reverse Mortgage, Seniors, supplemental retirement income, Sandwich Generation, Retirement security, Government insured mortgage
Nice article. A lot of ground is covered regarding Reverse Mortgages but some key points have not been touched on that I think are important. Although a Reverse Mortgage has a broad array of practical applications, it is always more beneficial if it augments an existing retirement plan. Along these lines, I think it of paramount importance to point out that many retirees and seniors will not qualify for forward mortgages to refinance or home equity lines. In addition, for those that do, it is also very important to point out that any mortgage that requires a monthly payment entails risk. Regardless of your level of home equity the states will side with the lenders in default and your home can be at risk. I have saved several homeowners with equity levels as high as eighty percent from foreclosure and their false sense of security. A Reverse Mortgage can help families address this potential risk.
I would also like to comment on the “ambush” comment in the article relating to heirs and inheritance. Let’s be realistic. The family members can contribute funds monthly or they can allow their family member the independence to provide for themselves with the help of a Reverse Mortgage. Very few people will be able to solely rely on Social Security in retirement. In conjunction with this, if the homeowner has longevity and outlives their home equity, the families will be quite surprised by the windfall when the real losses are covered by the government insurance fund (MIP) and the heirs and the estate are unaffected. As an example, that means if there is a hypothetical $300,000 loss on the property after selling expenses and there is $300,000 in liquidity staring at you in the estate, the $300,000 goes to the heirs and the home stands on its own. Very nice benefit associated with a HECM Reverse Mortgage as a non-recourse loan.
Lastly, I was pleased with the article as it touched below the surface on many issues. However, a key benefit of the program that no other forward conventional or home equity type of program provides is the growth factor. The untapped portion of a homeowner’s principal limit will compound annually as they age thereby providing them additional available credit annually. This is a significant benefit that many simply fail to understand. You don’t need a TV celebrity to lure you into a call center for a Reverse Mortgage. To win with a Reverse Mortgage, you need a seasoned local expert that can help you understand the benefits and tailor the loan program to your specific needs.
George H. Omilan
President-CEO - NMLS# 873983
Jefferson Mortgage Group LLC
Helping seniors with Reverse Mortgages in Virginia, Maryland and Pennsylvania.