When Is The Best Time To Get A Reverse Mortgage
When Is The Best Time To Get A Reverse Mortgage?
by
Amy Catling, C.S.A.
GIA Mortgage
1-800-476-2858 or 1-207-251-0633
acatling@seacoastreversemortgage.com
Reprinted with permission from The Senior Times newspaper
Do you know the simple answer to the question “When Is the Best Time To Get A Reverse Mortgage”?
The best time for you to get a reverse mortgage is when you could use one.
The government-insured reverse mortgage is simply a home equity line of credit or loan whose payments can be deferred as long as you or a co-borrower is still using the home as a primary residence. You can always choose to make payments on your reverse mortgage if you want to, giving you control over your balance.
And just as you wouldn't go out and open a standard home equity line of credit unless you had some use or potential use for the money, if you are an older homeowner (over age 62), consider what you will use your reverse mortgage for before applying for one.
For example, one of my most recent clients in southern Maine had a roof that needed replacing. It had needed replacing for awhile, but he could get away with not having it done as long as the winters weren't too bad. After the winter of 2008/2009, he decided that he wasn't going to feel comfortable living under that roof for one more season! However, roof replacement costs several thousand dollars, and he was not only living on a fixed income, but his savings and investments had suffered losses like everyone else's. A reverse mortgage was his perfect solution. His is a modest home, but he still qualified for $79,000. The roof is being replaced as we speak, and he doesn't plan on using any more of his line of credit, but it's there if he needs it. His reverse mortgage balance will now be only what he used to pay for the roof and he can pay it or not as he wishes. Two years ago he was not quite ready for a reverse mortgage because the need wasn't there yet, but 2009 was exactly the right time for him.
Other clients from this past month include a couple in their late 60's who were uneasy not knowing what the economy will do in the future, and wanted the security of knowing that a government-insured reverse mortgage meant that their money would always be available to them regardless of economic ups and downs. Their home appraised for approximately $450,000, and they qualified for a credit line of $202,000.
Still other clients for whom a reverse mortgage wasn't even on the horizon as recently as last year found themselves looking at it as an option to offset losses suffered in the stock market. They reasoned that opening a reverse mortgage line of credit and withdrawing money from it, rather than from their shrunken investment portfolio, would give the portfolio time to recover more quickly. And when it did recover, they would resume withdrawing money from the portfolio rather than the reverse mortgage. Not only do they now have two options for sources of income, but they also have the option of paying down the reverse mortgage balance if they choose.
Those are just a few examples of the best time to get a reverse mortgage – but what's the worst time to get a reverse mortgage?
When I speak with a potential client who tells me that they can't wait to move next year, I tell them not to get a reverse mortgage because the loan will be due when they're no longer living there and it's not cost effective for them. The federally insured reverse mortgage came into being in order to help older Americans remain in their homes as they age, and consequently they work best for people who want to stay put. Unless you truly need the money right now, it's best to wait on the reverse mortgage until you're where you plan on staying for the foreseeable future.
Like any other financial product, a reverse mortgage fills a need; and you don't get one until that need exists. The timing may not be right for you when your neighbor gets a reverse mortgage, or your sister, or when you turn 62. But when the time IS right for you, a reverse mortgage can be the perfect solution to many issues facing today's mature homeowner.
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