CRMP, MBA, CSA
A Home Equity Conversion Mortgage (HECM) – often called a reverse mortgage – is a federally insured loan program that allows qualifying seniors 62 years or older to access the equity in their homes in the form of cash, a monthly check or a line of credit that is available for as long as one lives in the home. Over the next several issues of the Fifty Plus Advocate I’ll be sharing examples of how homeowners are using reverse mortgages to provide a better quality of life.
Pay off current mortgage or equity line
Struggling to make a monthly mortgage payment when you have significant home equity can be frustrating. By paying off your mortgage you can significantly increase your available monthly cash flow.
Home repairs or renovation
Many homes have a leaking roof, wet basement, peeling paint, rotting windowsills, overgrown trees, uneven brick walks, failing heating system, needed septic repair or a wobbly deck. A reverse mortgage can provide the money to correct these issues. Or perhaps that dream addition can now become a reality. Whether it’s a repair or a renovation project, any home improvement will protect against your home losing value.
Supplement a working retirement
Many older people need to continue to work in order to make ends meet. A large number are self-employed, work part-time or have seasonal income. A reverse mortgage gives the option to convert untapped home equity into tax-free cash to supplement changing income levels. One common example is independent real estate agents who have peaks and valleys in sales. A reverse mortgage can help with their cash flow needs. Wouldn’t you rather work because you want to, rather than having to work?
Rainy day / emergency funds
Even with the best plans sometimes you need a bit more money. Maybe there is a health issue, a house or car repair, or an adult child calls asking for a loan. You don’t want to liquidate your investments. With proper planning, a reverse mortgage can give you the additional cash you need without impacting your financial stability.
Funding an active lifestyle
With improved living habits and medical care, “75 is the new 55.” People want to be able to afford to have fun. It will no longer be unusual for 80-year olds to be traveling, biking, hiking, or even running marathons. But these activities cost money. A reverse mortgage is one way to fund an active lifestyle while not depleting retirement savings.
For those considering a reverse mortgage or if your profession includes older individuals, I encourage you to invest 20 minutes to learn if a reverse mortgage will help you achieve your goals. I’d enjoy the opportunity to speak to you about your particular situation.
Alain Valles, CRMP and president of Direct Finance Corp., was the first designated Certified Reverse Mortgage Professional in New England and is the leading licensed loan officer in Massachusetts. He can be reached at 781-724-6221 or by email at av@dfcmortgage.com. Archives of articles from previous issues can be read at www.fiftyplusadvocate.com.
