Boomers and the Reverse Mortgage
By Robert Trommler
As our nation ages, the Baby Boomer group carries with it many distinctions. They claim firsts in numerous categories, some positive, and others less positive. For the most part, Boomers may be famous for denying themselves little in the way of pleasures and luxuries, whether they can afford them or not. And this particular distinction may deliver some rude awakenings when it comes time to consider Boomer retirement.
Because the Boomers have been less disciplined in “delayed gratification” in life, they may find themselves less well prepared for retirement than their “greatest generation” parents. To their credit, Boomers have been more willing to accept risk when it comes to investments. Maybe it has been a result of faster changing financial markets, more choices and information made available through the internet. Regardless the cause, this group is less risk adverse than their parents, but they may also have less capital to dedicate to investment options.
And an interesting phenomenon will likely develop as a result. The Reverse Mortgage may be welcomed enthusiastically by cash strapped Boomers. (The Reverse Mortgage is an age limited home equity loan that requires no repayment as long as the “senior” borrower lives in their home.)
Since this loan program became government regulated and controlled in 1989, the senior citizens common mistrust is largely exaggerated and unnecessary, but that is an ear-mark of that particular generation. Be conservative. Be cautious. Be careful. Not so are the live large Boomers. And they will eagerly embrace this real estate retirement option because in many cases, it will be the only option they may have to augment their retirement funds.
Not that this is a bad thing. With regular program improvements, the Reverse Mortgage loan can change borrower’s lives in the right situation. It is certainly not a panacea, not a one size fits all retirement solution. But when the right fit is indeed found, this loan can change people’s lives. With the strain that retiring Boomers will put on current social programs, the Reverse Mortgage may be an idea whose time has certainly come.
REVERSE MORTGAGE – THE A-B-C’S
The basic definition of the Reverse Mortgage is – it’s an equity loan on a senior (age 62+) home-owner’s property that needs no repayment as long as the senior lives in that property.
Although it appears to have been a recent well kept secret, it has actually existed since the early 1980’s. However, since that time, the FHA (Federal Housing Administration) has taken control of this loan program. It closely regulates all aspects of this offering and by doing so protects the senior consumer’s interests. Parameters such as interest rate, the loan amount made available to each borrower, range of fees and costs are all determined by the FHA. Individual lenders do not have the option of changing these important elements of the loan program.
The basic conditions of the loan are:
- All borrowers on title of a property must be the age of 62+ to qualify for the loan.
- Credit and income are not considered for loan qualification.
- Loan funds are not taxable and are available as a monthly payment, line of credit or lump sum withdrawal.
- The property title and deed always stays in the borrower’s name.
- The loan has no repayment penalty and can be stopped/removed at any time.
- Borrowers must complete a no-cost counseling session on the program (from an FHA approved agency) before starting the application process.
- The Reverse Mortgage must pay off any existing mortgages before Cash-Out is made available.
Although having access to an additional source of retirement funds is always attractive, for many Reverse Mortgage borrowers, just having their current mortgage paid off and removing that payment can make a huge difference in their life-style.
For senior home-owners that may be “house rich and cash poor” the Reverse Mortgage can be an ideal fit and provide them with financial options they would not have had without this government loan program.
It doesn’t cost anything to find out if the Reverse Mortgage will help you reach your financial goals. Do your homework, get the facts on your property and situation and discover what other borrowers have already confirmed about the Reverse Mortgage.
WHY REVERSE MORTGAGE AS A CAREER? (My Story)
“After becoming a mechanical engineer and moving through a number of other careers in my earlier life, I truly feel contented in my work as a Reverse Mortgage Consultant. As my wife of 10 years says, ‘the Lord has had you in training for the past 53 years for this position’.
I imagine I am right on schedule in some respects. Mid 50’s seems to be the life stage where some people start to look to a life of significance instead of success. And although a career as a loan officer can certainly be one of success, it’s the shot at significance that gets me out of bed in the morning.
I don’t have to work. I get to work. I get to help senior home-owners mine some of the equity out of their homes without requiring repayment as long as they live in their home. It’s a highly regulated government program that rigidly protects the interests of seniors in many ways. And as a result, I sleep really well at night.
I have many stories of clients and borrowers that have done remarkable things with the funds from this loan program. But my favorite is the family in Indio that went from a pending foreclosure on their home to staying there without another payment. Three generations of family living in one home that was almost forced out on the street.
If I wasn’t a Christian, I might be tempted to say “I did that”. But I’ve been saved since 1995 and I know it was the Lord guiding my steps. I’ve prayed with and over many clients. And although my business card carries a highly recognized “stage-coach” brand, I still know who my real Boss is, and He’s not a banker, He’s a carpenter.”
By Robert Trommler
