House Rich, Cash Poor? How a Reverse Mortgage might turn your life around (Copy)
by Sally Rudloff
Transitioning to senior living can be a daunting process, filled with both excitement and uncertainty. For many seniors, downsizing from a beloved family home to a smaller, more manageable space can feel overwhelming. However, with the right guidance and support, this transition can be a smooth and empowering journey. In this blog post, we'll explore the importance of downsizing with dignity and introduce an upcoming event tailored to seniors embarking on this next chapter of their lives.
**Why Downsizing Matters:**
Downsizing isn't just about decluttering or moving to a smaller space; it's about creating a living environment that supports independence, safety, and overall well-being. Many seniors find that downsizing allows them to shed the burden of home maintenance and focus on enjoying their golden years to the fullest. Additionally, downsizing can provide financial freedom and open the door to new opportunities for socialization and community engagement.
**The Senior Downsizing Event:**
We're thrilled to announce an upcoming event designed specifically for seniors who are navigating the downsizing process. Whether you're considering a move to a retirement community, assisted living facility, or simply downsizing to a smaller home, this event is for you. Our goal is to provide seniors and their families with the resources, support, and guidance they need to make informed decisions and embrace this new chapter with confidence.
**What to Expect:**
At the senior downsizing event, attendees can expect a variety of informative sessions, interactive workshops, and one-on-one consultations with downsizing experts. Topics covered may include:
1. Understanding the downsizing process: From decluttering and organizing to packing and moving, we'll walk you through each step of the downsizing journey.
2. Navigating emotional challenges: Letting go of possessions and saying goodbye to a longtime home can evoke a range of emotions. Our experts will offer strategies for coping with these feelings and embracing change.
3. Exploring housing options: Whether you're interested in independent living, assisted living, or aging in place, we'll provide information on different housing options and how to choose the right fit for your needs and lifestyle.
4. Downsizing your belongings: Downsizing often involves making tough decisions about what to keep, donate, or sell. Our workshops will offer practical tips for downsizing your belongings while preserving cherished memories.
5. Financial planning: Downsizing can have significant financial implications. Our financial advisors will offer guidance on budgeting, selling your home, and maximizing your resources in retirement.
**Conclusion:**
If you're a senior contemplating downsizing or supporting a loved one through this transition, we invite you to join us for our upcoming downsizing event. Together, we'll navigate the journey to senior living with dignity, compassion, and support. Stay tuned for more details on dates, location, and registration information. We look forward to helping you embrace this exciting new chapter in your life!
Cheryl McCarthy, Reverse Mortgage Advisor | NMLS#662082 | Mutual of Omaha Mortgage NMLS#1025894| Licensed by The Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act
How a reverse mortgage can benefit you
In this series, Cheryl will give real-world examples of how this product really impacts someone’s life, who seeks out her help, talks about the benefits of this financial tool, informs you about what rules govern this financial product, and walks you through the old myths and fears from a pre-regulated housing marketplace. * All names of her clients are fictional to protect their identity.
Homeowner stays with a HECM
We started our conversation with an example of how a HECM (aka, reverse mortgage) allowed someone to stay in their home. A quick primer on reverse mortgage details & lingo before we get back to our example:
one borrower has to be 62
a spouse can be younger than 62
would be considered a non-borrowing spouse (NBS)
FHA has protections for an NBS
Cheryl said, “I’m working with Fred, who is retired. Sadly, his wife has dementia and he’s the only caregiver. In addition to everything else he has to deal with, he still has a large mortgage payment of about $2500 per month to worry about. The combination of the mortgage payment and taking care of his wife at home was stressing him out. Fred felt overwhelmed and needed some help. Luckily, he has a power of attorney (POA) that allows him to act in the best interests of his wife and himself. After looking at his situation, we determined that the best solution meant creating both a reverse mortgage, which will eliminate his mortgage payment, and giving him a line of credit that he can use for whatever he needs. Right now his biggest expenses are for her in-home care, but he’ll have some flexibility for whatever the future may bring too.”
Who is a typical client and has it changed?
“Long before the pandemic, my average customer tended to be in their late 70s to early 80s. Then in about 2017, I started seeing baby boomers begin to retire. Boomers, in my experience, tend not to be risk or debt averse. In fact, many usually go into retirement with a large mortgage payment ‘which will kill your retirement.’ After receiving their reverse mortgage, they pay off their large mortgage, and more than likely a line of credit (aka, HELOC - Home Equity Line of Credit). Then they can use their retirement income for whatever they need. I also have other baby boomer clients that are retiring and setting up a line of credit with their reverse mortgage, so they can use it in conjunction with their investments.”
Reverse mortgage as a wealth management tool?
Cheryl referred me to this article from the New York Times to better understand how a reverse mortgage can also be used as a wealth management tool. Apparently, the thinking goes that the earlier you set one up for yourself, the more likely you are to be able to take maximum advantage of it. The article focuses on the benefits to younger retirees in their 60s and early 70s. “The best use of this tool is to provide and supplement income during retirement,” said Craig Lemoine, the director of the financial planning program at the University of Illinois, Urbana-Champaign. “A younger retiree can stay in the house while turning equity into an income stream.”
This is something we’ll explore in more detail in another blog post, but for now, think of it as one more option if you’re considering getting a reverse mortgage.
What are the current reverse mortgage (HECM) qualifications?
The borrower must be at least 62 years old
The home must be the borrower’s primary residence
The amount that can be lent is based on the appraised value and rates of interest
In our next installment, Cheryl and I discuss Jumbo Reverse Mortgages (minimum age is 55 - no protections for a spouse less than 55) and using a HECM (reverse mortgage) for purchase, plus she dispels old myths and fears about getting a reverse mortgage.
If you have questions regarding reverse mortgages, please contact Cheryl:
email: cmccarthy@mutualmortgage.com
phone: 510-507-5616
website: alamedareversemortgage.com
Until next time!