Kevin's Corner

Make a Difference

It is time for something new! The new and improved Kevin’s Korner! I hope everyone will enjoy the change.

In my last column, I talked about New Year’s resolutions. About getting your financial house in order for 2007. I have been overwhelmed with response to the article but from a slightly different group of people than I thought. It certainly enlightened me to the fact that although reverse mortgages are more heavily advertised, there are still so many eligible people who still don’t know about them. Or, if they have heard of them, they still don’t really understand how they work or if a reverse mortgage is appropriate for them.

The first group of people that should really entertain a reverse mortgage are clearly the people in their mid-70’s or older that do not have enough monthly cash flow to meet their expenses or are so close that they have to “worry” themselves through the problem each month. Using their home equity through a reverse mortgage to alleviate this cash flow crisis is quite logical. If the primary source of your income is social security, it is quite certain that the cost of living in New Jersey will increase faster than net increases in social security (net of increases in Medicare).

This week, I met just such a person. She lost her husband earlier in 2006 and he had always taken care of the finances. Her health is OK, but she has trouble getting around and just cannot take care things like she used to. This both frustrates and depresses her but she has to keep going. A friend of hers had recommended that she get a mortgage to help clean up the medical bills and credit cards left over after her husband passed. What a bad mistake. The mortgage payment plus taxes and insurance has ended up costing her more than 80% of her monthly income. Now she struggles to pay the rest of bills and worries about it every day. The oil bill came in; she has no idea when she will be able to pay it. She has trouble sleeping at night. Her children, struggling to make it themselves, can only help a little.

Does this sound familiar? Is this your story or some else you know? In this case, a reverse mortgage will eliminate the monthly principal and interest payment on the mortgage and will provide over $700 per month in cash payment to her every month. Her cash flow has now changed from a negative $250 per month to a positive $500 per month. Now she can afford supplemental health insurance and some new clothes. Now she can afford to bring in some help into the house to get to things she just cannot get to. Now she does not have to lay sleepless in bed worrying about how she is going to pay the oil bill or pay for groceries.

She is not alone. In the last two weeks, I have had over a half dozen situations like this come to my attention. I have to believe there are many dozens more out there. People not aware of these types of programs or too prideful to look for assistance. The difference for this particular person is that she decided to do something about it. She made a resolution. There had to be a solution that would allow her to continue to live in the home that she has lived in for 45 years and not be forced into an adult “dorm” room or go on public assistance. She called me and she found the solution.

I have often talked about using a reverse mortgage to improve the quality of life in retirement, but the lessons of the last couple of weeks has taught me once again how fragile life is and how easily the delicate balance of ‘making it or not making’ can be pushed in the wrong direction.

I implore anyone who reads this column to make a decision to help someone. If this is not your story but you know someone who could be helped, please pass this on. Make a difference, God knows you will feel better about it. Please call me 1-800-496-4035 and let me help.