Kevin's Corner

Your Time Has Come!

The annual National Reverse Mortgage Lenders Association (NRMLA) conference was held in San Francisco September 28 to 30. The continued big news is the overwhelming success of reverse mortgages. The number of mortgages issued in the federal calendar year (Oct 1 to Sept 1) is double in 2005/6 than 2004/5. This in spite of higher interest rates and flattening property values.

Also very exciting are the number of new investors and the ideas they have for new products. I introduced a new product called the Cash Advantage about a month and half ago which allows borrowers to pay lower upfront costs and pay a higher interest rate with no limit to property value. It has been very well received and I expect that others will follow suit.

Although the reverse mortgage industry is growing rapidly, there still are many eligible participants that have ‘heard’ of reverse mortgages but do not really understand how they work. Many still believe that they loose their home or control over their home. Others still believe that their heirs would not get anything when they pass away. Even worse are those that believe that using their home equity to help finance their retirement needs is a sign of failure.

No one would argue that people are living longer and the cost of long term care needs is increasing every year. How do people on a fixed income pay for higher care costs and higher everyday living expenses? Well, hopefully they saved enough to pay for these costs.

What if you didn’t save enough or had some unexpected event that drained your savings. What if you thought that increases in Social Security or pensions would keep you whole? The truth is that many retired Americans do not have enough savings to meet these expenses. Fortunately, we live in a vibrant economy that has resulted in higher real estate values and consequently higher home equity. Thank goodness.

Home equity has become the savings for many retirees. Plain and simple. Now, how is the best way to put that money to use? The first option is to sell the home, rent and use the proceeds to cover expenses. Of course the other option is to borrow the equity either with a conventional mortgage or a reverse mortgage thereby staying in the home and using the proceeds to cover expenses.

The popularity of reverse mortgages is they do not require any principal or interest payments until the borrowers permanently leave the home. This conserves the cashed out home equity. Conventional mortgages require at least interest payments which reduce the available funds to pay expenses. In addition, most reverse mortgages do not require borrowers to take all the money up front which reduces the accumulated interest, conserve remaining home equity and extend the period funds will be available.

I offer both conventional and reverse mortgages to my clients But, when someone asks me what program I would advise for my mother and father it would be a reverse mortgage. Hands down. I would tell: don’t worry about what I’ll get when they are gone. I would want the best quality of life for them. Use their money to live how they want to live. A reverse mortgage is a life style product with safeguards.  No one can take your home, you live in your for as long as you want regardless how long that is. Guaranteed benefits with consumer safeguards. There are not any conventional products like it.

No wonder the industry is breaking records every month. It is not a fluke. Perhaps it is time for you or someone you know to learn more about how a reverse mortgage works. If you are 62 or older, own your home and your home is not a co-op, mobile home or on leased land, you are eligible. Call me today for your free information and benefit analysis. Find out why so many others are living comfortably and more financially secure.