A Reverse Mortgage for a Neighbor
I recently received a call from a man asking me for a rate quote on a Reverse Mortgage. I asked him if he was at least 62, and he told me that it was for his neighbor. As the conversation continued he went on to tell me that he recently had to lend money to his 75 year old neighbor. They owned their home free and clear, after many years of hard work. They were now faced with mounting anxiety as they were unable to pay for their bare necessities.
They were very unhappy with the thought that they would have to sell the house that they had worked all of their life to own and move into a small apartment. They had become very depressed, and their neighbor was worried about them.
I had their neighbor bring them by my office so that I could explain how a Reverse Mortgage works. They were pleased to learn that they would be able to live in and own their house for the rest of their life. They could choose the payment type they would receive from the equity in their home, and maintain their living standard, without having to borrow from neighbors. They would be able to maintain their dignity!
Since a Reverse Mortgage is specifically for individuals that are in their senior years, the government has tried to maintain a very close control of the product. Before a borrower may even enter into the official application process for a Reverse Mortgage, they must complete a counseling session by a third party (usually about an hour). And it can be done over the phone! That third party CAN NOT offer Reverse Mortgages, nor can they recommend any specific product. This session is held to assure that the borrower has a complete understanding of the loan transaction into which they are about to enter. These counseling sessions are held by licensed counselors like AARP.
There are many misconceptions about Reverse Mortgages. Some people feel that a Reverse Mortgage means that the elderly loose their home. NOT TRUE. The home is theirs, just as it is with any conventional mortgage. When the home is sold, there is a mortgage balance to be paid. JUST LIKE ANY OTHER MORTGAGE.
The balance on a Reverse Mortgage is only those funds that have been borrowed, plus any closing costs that were added to the loan balance. There are no “pre-payment” penalties. The house can be sold or re-financed at any time.
Payments can range from one lump sum payment, to a combination of a lump sum and monthly payments, or even a line of credit. The monthly payments can be arranged for a specific number of months, or for the rest of your life!
I recently received a call from a man asking me for a rate quote on a Reverse Mortgage. I asked him if he was at least 62, and he told me that it was for his neighbor. As the conversation continued he went on to tell me that he recently had to lend money to his 75 year old neighbor. They owned their home free and clear, after many years of hard work. They were now faced with mounting anxiety as they were unable to pay for their bare necessities.
They were very unhappy with the thought that they would have to sell the house that they had worked all of their life to own and move into a small apartment. They had become very depressed, and their neighbor was worried about them.
I had their neighbor bring them by my office so that I could explain how a Reverse Mortgage works. They were pleased to learn that they would be able to live in and own their house for the rest of their life. They could choose the payment type they would receive from the equity in their home, and maintain their living standard, without having to borrow from neighbors. They would be able to maintain their dignity!
Since a Reverse Mortgage is specifically for individuals that are in their senior years, the government has tried to maintain a very close control of the product. Before a borrower may even enter into the official application process for a Reverse Mortgage, they must complete a counseling session by a third party (usually about an hour). And it can be done over the phone! That third party CAN NOT offer Reverse Mortgages, nor can they recommend any specific product. This session is held to assure that the borrower has a complete understanding of the loan transaction into which they are about to enter. These counseling sessions are held by licensed counselors like AARP.
There are many misconceptions about Reverse Mortgages. Some people feel that a Reverse Mortgage means that the elderly loose their home. NOT TRUE. The home is theirs, just as it is with any conventional mortgage. When the home is sold, there is a mortgage balance to be paid. JUST LIKE ANY OTHER MORTGAGE.
The balance on a Reverse Mortgage is only those funds that have been borrowed, plus any closing costs that were added to the loan balance. There are no “pre-payment” penalties. The house can be sold or re-financed at any time.
Payments can range from one lump sum payment, to a combination of a lump sum and monthly payments, or even a line of credit. The monthly payments can be arranged for a specific number of months, or for the rest of your life!
Bob Tomasso
bob@tomasso.com
