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Important Intergenerational Information on Reverse Mortgages

One of the things that I love most about my intergenerational work is the joy that it brings me to see communication, caring, organization, capturing memories, and planning happening within the generations so that ultimately, everybody wins. To prove that point, my husband and I often reflect on the years in which we had an intergenerational home where our dads lived with us.

This current COVID-19 pandemic has affected each and every one of us in some way. It has also opened the door to crucial conversations between the generations regarding our elders and their ability to be able to age safely in place and have access to funds when necessary. This leads me to a discussion on reverse mortgages.
This current COVID-19 pandemic has affected each and every one of us in some way. It has also opened the door to crucial conversations between the generations regarding our elders and their ability to be able to age safely in place and have access to funds when necessary. This leads me to a discussion on reverse mortgages.
My husband and I recently met with a friend of ours, Pudge Erskine, who was a caregiver for his parents. As he himself is now aging, he has dedicated his efforts to educating people about the usefulness of obtaining a reverse mortgage; you must be 62 years of age or older to obtain one. 
There are pros and cons to all major decisions that we make, and you should discuss these issues with your professional advisors. Here are a few of the benefits that make it different from conventional mortgages that people are generally accustomed to:

1.    A reverse mortgage is a financial tool to turn equity in your home into cash that can be used for many different purposes. The mortgage terms are insured by the FHA and are called a HECM (Home Equity Conversion Mortgage). However, there is a required education and counseling session from a third-party counselor that you must undergo before you can obtain a reverse mortgage.

2.    There is not a monthly mortgage payment; it goes away and frees up money for you. You must continue to pay property taxes, insurance, and HOA dues if applicable, etc.

3.    When you permanently move out of your home or pass on, the value of the home is responsible for paying off the mortgage – not your assets or those of your estate or your heirs. If there is a deficit, the difference is paid off by the mortgage insurance which is a part of all reverse mortgages insured by the FHA. If the mortgage is higher than the home value, you or your heirs can purchase the house back for 95% of the current appraised value.
4.    The title to the home remains in your name, and you can sell it, remodel it, and keep any equity that is left when you move.
Many people are surprised to learn these things about reverse mortgages, and we were as well.
Our friend, Pudge, is so gratified by the number of people whose lives were improved by having access to the funds they needed for food, medicines, surgeries, and other unexpected expenses. A higher cost for accessing the benefits of a reverse mortgage is due primarily to the FHA insurance which enables reverse mortgages to be safer than they were in the early years. The only out-of-pocket charges to the borrower are for the FHA-required counseling and for the home appraisal (the total is typically less than $600 for both).
Pudge has also offered to help people learn more about reverse mortgages and answer questions from his own years of personal experience. In these COVID-19 days, when social gatherings and seminars are not possible, it’s important to understand that you can still obtain this valuable information over the phone from Pudge by calling him at (818) 601-1926. He is truly a fountain of knowledge as a Reverse Mortgage Specialist, CRMP, NMLS 1289933 / 1626788

Written By Debbie Bitticks
 

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