Who are my reverse mortgage customers?
By: Maggie O’Connell, Reverse Mortgage Specialist
A gentleman walked into my office the other day and asked who are my reverse mortgage customers. My initial response was, homeowners who are at least 62 years old. He said, yea yea, I know that, but more specific, who is getting reverse mortgages and for what reason. In the early days of reverse mortgages, it was easy to pinpoint my typical client and the statistics were behind it; a woman, typically widowed in her 70’s with little or no mortgage and needed more money to supplement her limited income. Fast forward to today, and there are almost as many reasons to get reverse mortgages as there are customers. Here are a few:
Some of the first boomers retired early or were forced to retire during in the boom around 2007 and 2008 and their retirement portfolio looked okay but reality set in quickly when the financial and housing markets busted.
Boomers are my newest customers. The reverse mortgage is a solution to getting rid of the monthly mortgage expense and stretch money and assets in an effort to sustain themselves financially. For many, the reverse mortgage has been a way to hang on to their homes which in most cases is a priority both financially, maintaining quality of life and achieving goals.
It’s interesting, when I started in the reverse mortgage business, my customers were like my grandma, then my parents and now they are my generation!
Only a few years ago, I only originated one or two reverse mortgage purchase loans. Now I always have a purchase transaction or two in my pipeline. And the reverse mortgage purchase is fast becoming recognized by real estate agents as a way to generate new business and make a real difference in sales volume. (not to mention doing something great for clients!)
As folks age, moving can be a way to manage finances better and improve quality of life. Selling the family home that may be too big and too expensive to maintain, perhaps not convenient to family and services may be the best option. Although it can be such a daunting task financially, emotionally and physically that it’s not even considered. A caring and loving family can play an important role in creating a plan and help implement it in order to make a move for their parents, grandparents and friends possible.
The reverse mortgage can help with the purchase of a new home as it provides money toward the purchase and because no mortgage payments are required, the senior can buy more home for their money and hopefully live in a community that is right for them and possibly close to family members to help look after them. Getting reverse mortgage financing in place on a new home and creating an easy one time move for the homeowner can help minimize stress during this time.
If I were to choose my typical client, it would be in the ‘Stayers’ group. These are people who plan to live in their home the rest of their lives. Many declare they will only leave their home ‘feet first’! They’ve lived in their home a long time, with plenty of equity built in. Many homes are free and clear. With no mortgage to pay off, the reverse mortgage allows them to access their home equity over time with the use of the reverse mortgage line of credit or monthly payment tenure option. Often they fix up their home to make it more comfortable and safe as they age. Many do home modifications including rails, grab bars, wood floors, walk in bath tubs even stair lifts so they can live a comfortable and safe life in the home they love and most important, avoid going to a nursing home. They feel using their home equity to help them stay in their home for life is wise and the reverse mortgage is the tool that helps them achieve their goals.
Security Seekers Emergency Fund or ‘self-funded long term care policy’
Home equity is an asset that is made available through the use of the reverse mortgage line of credit. The low cost ‘saver’ option and growth feature makes it very attractive for those who want to preserve equity but have a cushion if needed. Some are comforted in knowing if they need money for any purpose, such as health care in their home, at whatever level, they have the money available. If they end up not needing in-home health services, they have it available of any other purpose and if they don’t use it, it’s simply equity that will eventually go to their heirs. Other’s find the growing credit line a hedge against a possible depreciation in the home as the HECM reverse mortgage line of credit will be available even if the home value declines. The available line of credit is not charged interest so it’s a very economical way of having funds available quickly if needed.
Solution Driven People Estate & Family Settlements
Creative use of reverse mortgage funds as solutions to family and estate problems are more and more common. More recently, people are using reverse mortgages to buy out a spouse in a divorce so one can remain in the home and continue ownership without the burden of making monthly mortgage payments. Divorces can be very traumatic and having to sell the home in order to pay off the spouse can be devastating emotionally, physically and financially. It’s a win-win situation.
In estate planning, many siblings end up with a portion of the family home. When one sibling want to live in the home and buy the other out, provided they are at least 62 years old, find the reverse mortgage a perfect tool. What a nice alternative to selling the family home!
This year, I closed a second generation reverse mortgage. I did a reverse mortgage 12 years ago for a client who passed away and her daughter who lived in the home was just turning 62. She was able to get her own reverse mortgage and pay off her mother’s reverse mortgage and now plans to live in her family home for the rest of her life.
In some cases, a little help to family members at the right time can make all the difference in the world…. Some money to stop foreclosure of a child’s home ….university tuition for a grandchild
…..And let’s not forget the customer who wants to have more money so they can get the most out of life!
Maggie O’Connell, 800-684-9438 email@example.com www.ReverseMortgageStore.com