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Senior Homeowners Make Life Golden
With Reverse Mortgage
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Two sprightly homeowners in their late 70-sabell Moore of Portland, Ore., and Wilbur Saks of Bethesda, Md. - have a blunt message about home equity for their fellow seniors across the country:
Don just sit on that equity; Use it. Have fun. Travel. Don't deny yourself pleasures because you want to
"save" all your equity to pass on to your heirs.
Moore and Saks are at the vanguard of an important generation change under way among American Seniors. Both own comfortable, well kept homes in prosperous neighborhoods. Both have been retired for over a decade, and gradually discovered that their fixed incomes
aren't quite enough to keep up with the rising cost of living.
Equally important, both found themselves feeling hemmed in financially. They had almost enough monthly income to handle regular bills, but nothing to spend on the fun things that enrich
anyone's retirement years. "We got to the point,"
says Saks, "where were strapped and going nowhere."
Wilbur Saks and his wife, Anne, solved their cash-flow problem in a way that growing numbers of seniors are becoming more willing to try: They put a
"reverse mortgage" on their home, pulled out a chunk of cash immediately, and are receiving monthly checks from their lender.
"We used the money to complete some long-postponed home repairs and do some
traveling." Moore created her own back yard paradise by creating a pond, installing a sprinkler system and planting a lush garden to her enormous enjoyment.
As the name suggests, reverse mortgages work backward: Rather than the borrower sending money to the lender, the lender sends money to the borrower. Many seniors and their relatives remain suspicious of reverse mortgages. Liz Scholz, a Fannie Mae expert on the subject, says that some families still believe that
the lender is going to take mom's home away from her if she signs up for a reverse mortgage and lives for a long
time."
But that's never the case. All commercially available reverse mortgages on the market require no repayments to the lender until the senior sells the house or dies. Then the total of all payouts, plus accrued interest, is subtracted from the sale proceeds and sent to the lender. The rest of the money goes to the estate of the deceased homeowner.
Reverse mortgages carry consumer-protection features far beyond those of regular mortgages.
Thanks to decades-long effort by the American Association of Retired Persons (AARP) and the
National Center for Home Equity Conversion, all reverse mortgages come with
hands on counseling assistance, unheard of anywhere else in mortgage lending.
This is a partial reprint from an article written by Kenneth Harney, Washington Post Writers Group and was published in newspapers across the nation.
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