Reverse mortgages: Know your options

Wednesday, May 09, 2007

It's interesting how the economic condition of the 60-plus population has changed since we opened the Serving Our Seniors office in December 1996. Back then, the majority of seniors who called our agency for help owed nothing on their home. Today, we have seen a 180-degree turn. Most older adults who call our office still have a house payment, and many have taken out a home equity loan that has made their financial situation worse , not better.

There is a loan that is available to people age 62 and older that doesn't require the borrower to pay it back as long as they are alive and living in that home, a reverse mortgage. Although Serving Our Seniors does not endorse reverse mortgage products or lenders, it does realize that more of the 60+ population believe it is necessary for them to borrow in later life. If that is the case, then older adults need to know what a reverse mortgage is so they can consider it as one of their borrowing options.

There are different types of reverse mortgages. I am going to discuss the Home Equity Conversion Mortgage that is backed by the federal government. With a reverse mortgage, the financial institution/broker does not look at the older adult's income, nor is it going to arrange for the older person to make monthly payments on the money borrowed. Why? Because the money is paid back when the older adult dies, sells the home or permanently moves out of the home.

Don't think that this is free money, because it's not. Variable Interest rates are being charged for the money borrowed. The difference is that you aren't getting the bill. And you won't get the bill until one of three things happen: you die; you sell your house; or you permanently move out of the home. Only then will it be time to pay the piper.

I hope I have just whetted your appetite to become better informed about reverse mortgages, because Serving Our Seniors is hosting "Understanding Reverse Mortgages" from 2-4 p.m. May 31 at the Erie County Office Building (3rd floor), 247 Columbus Ave., Sandusky. This is not a sales pitch presentation. It is a factual presentation to help older adults understand what a reverse mortgage is and how it works. The presenter will be Jim Nabors of Citizens Banking Company. Adding to his presentation is a side panel of experts who will interject clarifying comments to ensure the presentation is objective and easy to understand. The side panel of speakers is: Brad Payne, senior housing specialist with the U.S. Department of Housing & Urban Development; Tom Bowlus, counselor with Consumer Credit Counseling; and Alex Bilchak with the Ohio Department of Commerce, Division for Financial Institutions.

Source: SUE DAUGHERTY

You can also call 1-888-973-8377 to speak with a Reverse Mortgage Loan Officer with a Reverse Mortgage Lender.