One local couple decided to use a reverse mortgage to pay off their second loan they used to pay for kids to go to college to eliminate their payment and to give them a bit of piece of mind.
“The freedom of not having to pay out that $640 every month was unbelievable, especially when you’re retired,” said the woman in the Courant.
Because they have other sources of retirement income, the couple has not touched the $200,000 line of credit. “We can use it if we want or let it sit there. It gives us peace of mind to know we’ve got that $200,000 line of credit,” she said. “You do have to sell the house after either my husband or I would pass, but our kids are O.K. with that.”
The article also details how the HECM for purchase program allows seniors to streamlies the process of downsizing by allowing them to use a HECM to purchase a home in a single transaction, to reduce closing costs.
“People were doing this anyway,” said Susanna Montezemolo, vice president of federal affairs at the Center for Responsible Lending. “This new category of reverse mortgage reduces costs.”
Unlike a traditional home equity loan or second mortgage, repayment of either type of reverse mortgage is not required until the homeowner dies, moves or sells the home.
“A lot of people think that once you run out of the money, it triggers a repayment event,” Harrington said. “That’s not the case.”
Despite some of the negative press around the product, Jeff Lewis, Chairman of Generation Mortgage, said most of the negatives floating around are dramatically overstated. “As long as you maintain your home and pay your property taxes and insurance, you can’t be forced to leave. Homeowners still retain title and ownership to their homes during the life of the loan, and can choose to sell it at any time,” Lewis said.