We Have Been Pleased with Our Reverse Mortgage

j0409123.jpgOver the past several months I have been in conversation with a client that took out a reverse mortgage about 2 years ago. Their home is valued around $400,000. It has been an interesting conversation as they have been very pleased with what their reverse mortgage has done for them over the past 2 years. It has provided them a chance to enjoy their life more without the constant stress about finances.

Both husband and wife have said, “We want to use the maximum amount that we can. We don’t plan on leaving anything.” Now, I must say, I don’t get this kind of comment very often. They have three or four children who currently live in different parts of the country, and all of their children have encouraged them to use the reverse mortgage any way that they can to improve their quality of life. In fact, they have mentioned several times that their children all make more money in a given year than they ever have.

If you know much about reverse mortgages, HECM’s (the FHA insured product) has county lending limits that will limit the value of homes that exceed that limit. In this case, when my clients took out their original reverse mortgage, the limit was $284,600. This left them with almost $115,000 of equity that FHA did not recognize in getting the loan. Today, as we await lending limits to go up with the passage of the FHA Modernization Bill, they would be able to access another $60,000-$70,000 of their equity.

As we move into this new era of reverse mortgages, more and more seniors, who are struggling to take care of their financial needs and desires during their retirement years, will have great opportunity to benefit from the host of benefits that reverse mortgages offer. With cautious optimism, we look forward to President Bush signing the bill that will impact the lives of seniors today and allow more people to benefit from the program.

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