Let’s take a look at reverse mortgages

Solano Real Estate Scene: Jim Porter

Article By: Jim Porter – April 16, 2016

Have you noticed a huge increase in TV commercials for reverse mortgages? The primary reason is because we are all living a lot longer and folks are outliving their money.

Many seniors are finding it difficult to afford the cost of living. The cost of home maintenance, property taxes, food, utilities, bundled TV and phone packages, auto and medical insurance, the occasional vacation, grandkids and even grown kids can be costly and hard to handle when a senior citizen has a limited monthly income. Healthy seniors don’t want to sell their home and move down to a less-expensive home or out of the great state of California and leave their friends and family all for a more affordable cost of living and seniors, like my parents, don’t want to be burden to their children.

Today’s reverse mortgage programs offer seniors a solution to this predicament with many options.

A senior can pay off their mortgage via a reverse mortgage or remodel their home and pay off all their debts through the cash-out program. Some folks set up a monthly distribution through their mortgage where they get a check for $1,000 to $1,500 per month tax-free to supplement their income. A few clients do both; take a lump sum and get a monthly check.

The neat thing about a reverse mortgage is that the homeowners never have to make a monthly house payment again for the rest of their life as long as they remain occupants in the house.

HUD requires clients to go through a short and painless counseling and education program and I encourage the grown children or the family’s financial advisers to chime in with advice and guidance, also. Some seniors are reluctant to consider a reverse mortgage because they feel that somehow this will negatively affect the amount of wealth they will leave their heirs.

The bottom line on this is that most children that love their parents and grandparents don’t care if their senior loved ones use some of their real estate equity prior to death if it makes life better for their folks.

A reverse mortgage client of mine just died a couple of months ago at 90 years old and her loan balance on the reverse mortgage was $130,000. The daughter told me that they are now selling the house for $350,000 and her and her siblings will be splitting the estimated $220,000 proceeds. She told me that when she called my loan servicing department to let them know about her mom’s passing, the staff was extremely helpful and considerate.

The daughter also told me that the reverse mortgage was a true blessing for her and her mom because it reduced her mom’s stress dramatically for the last couple of years of her life. She thanked me and my team and that made me feel great about my loan officer doing a good job for this great old gal who lived a terrific, long life.

Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.