Reverse Mortgages Offer Programs for Clients with Different Life Situations
Today’s reverse mortgage programs generally service two types of clients: needs-based borrowers and mass-affluent borrowers. Both benefit greatly from tapping into their home equity, but for different needs. Let’s take a look at three real-life examples:
A married couple, both retired, were living on a dual social security income. They still had a house payment late in life, so the monthly mortgage was a large part of their budget. Unfortunately, John passed away unexpectedly, leaving Jane with a single fixed income. With all of her other monthly expenses, she wasn’t able to make the house payment anymore. After speaking with a Certified Reverse Mortgage Professional, who explained the process and guidelines, she realized that a traditional reverse mortgage (an HECM) was right for her, and could provide a sense of financial security when she needed it most. The reverse mortgage allowed her to continue to live in her house, with no mortgage payments, which freed up her social security income to pay her other living expenses and liabilities.
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More Customer Scenarios
A retired widow was living in a 3,000 square foot house—the same house she had her husband had lived in for the past 50 years. She had a comfortable budget, but realized the house was more than she needed, or wanted to maintain. She decided that she wanted to sell her house and move closer to her children and grandchildren. After looking at home prices in the new location, she wasn’t sure she could afford a home that met all of her requirements without making a substantial dent in her nest egg. She heard about a new reverse mortgage program, Home Equity Conversion Mortgage for Purchase, or H4P. The program allows seniors to purchase a new home and obtain a reverse mortgage in a single transaction. It also helped increased her purchasing power. She was able to take a portion of her proceeds to buy the house she really wanted, in a suitable size. She also had additional funds to put back in the bank or invest for the future.
A couple who both worked and earned a better-than-average income wanted to retire early, but they were concerned about using up their nest egg too quickly, and whether or not they would have enough to take through the end of their lives. They consulted with their financial advisor, who told them about using a reverse mortgage program as a financial planning tool. Because they had significant equity in their home, taking out a reverse mortgage early in retirement could help them bridge the gap before collecting social security benefits, or tapping into their 401-Ks and investment portfolios.
No matter your income level or life circumstances, today’s HECM or H4P programs offer a multitude of solutions to help individual customers meet their financial goals. To learn more about how a reverse mortgage may be right for you, speak with a certified Alpha reverse mortgage professional in your area.
Learn more about how people are using home equity conversion mortgages for purchasing homes:
Please keep in mind that the reverse mortgage industry in constantly changing and some of the information contained on this site may not be current. Please ask a licensed reverse mortgage professional for up-to-date guidelines.