Reverse Mortgage Provides Local Couple Peace of Mind

NewImage.jpgOne 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.”

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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.

Let The Borrower Beware

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  • ”You do have to sell the house after either my husband or I would pass, but our kids are O.K. with that.” There simply is no “either my husband or I would pass.” Where do borrowers get these concepts? It seems too many borrowers still really do not understand the terms of their HECMs. It is hard to find much comfort in these kinds of statements.

    • Fred,

      The HUD website is not the place for borrowers to understand their reverse mortgage. There are several different reverse mortgages still in existence. Borrowers should read their application and loan documents.

  • Good evening,

    At least this is not bad publicity, even though we have some misstated facts. Like the Cynic said “You do have to sell the house after either the husband or wife would pass away”. There is no “either my husband or I would pass.”

    They can live in the home as long as one survives the other. One other misstatement was the kids would have to sell the home, that is not true! The children have option of keeping the home as long as the pay off the balance of the reverse mortgage. They also have the option of selling the home and keeping what equity still remains.

    Again, the cynic was right, where do these people get their information. Their is still so little known about the product. Senator McCaskill is a prime example of that. She talks and talks but how much real knowledge about a reverse mortgage comes out of her mouth?

    Another day in our world of know it all's. Have a good evening all.

    John A. Smaldone

  • Fred,rnrnThe HUD website is not the place for borrowers to understand their reverse mortgage. There are several different reverse mortgages still in existence. Borrowers should read their application and loan documents.

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