Uncle Louie’s Reverse Mortgage

      I’d like to tell you a short story about my Uncle Louie who passed away a few years ago from a brain tumor. Some of my fondest memories were the times we got together to go fishing and diving off the Florida coast and also the Bahamas. My uncle was a master diver and a sea captain who loved to spend time with me, and I loved to spend time with him. In my eyes, he was larger than life, and I looked up to him with admiration for his time in the US Navy, and his unparalleled ability to captain a boat. When we took his boat from Palm Beach, Florida, over to the Bahamas, I knew we would always be safe no matter the weather. I loved my uncle, and I still drink coffee everyday from my treasured coffee mug he gave me that has a picture of his boat. Those were fond memories of a childhood filled with adventures with him doing all the things I loved to do most.

      When I lost my uncle to the tumor, I was devastated because I knew he could never be replaced. Whether you loved him or not, he would always tell you what was on his mind, and would never sugar coat anything. He demanded respect, yet he would give you the shirt off his back. When he walked into a room full of family members, we knew he arrived. He never just blended in with the rest of us. He just had that presence about him.

      I knew that if Uncle Louie ever needed anything, I would be there for him no matter what. I loved him from the bottom of my heart, and we formed a bond that couldn’t be broken. Then one day, about 15 years ago, I got a chance to help him out of a terrible predicament. You see, Uncle Louie lived a modest life, and although he was able to save some money, he was slowly tapping into it to the point that he was outliving his means to financially take care of himself. Uncle Louie still had a mortgage to pay, and his retirement wasn’t enough to pay all the bills. At that time he was still very healthy, and always active. He was still on his boat doing the things he loved to do most, but the mortgage had a financial strangle hold on his ability to be independent. In essence, he was in trouble and needed direction.

      When he came to me, we sat down and I listened to every word he had to say. He was embarrassed, and felt humiliated. I could see it in his eyes, and by his demeanor, he was terrified. This is a man who captained his boat through “the perfect storm” with me and my brother on board coming home from the Bahamas one day. He had no fear because he was in control and he knew just how to maneuver the boat to keep it from capsizing. No storm was going to take his ship down. But this was different, and he felt completely out of his element! He was always told that you work hard, and your retirement and social security would take care of you for the rest of your life. Little did he know, the cost of living each year would slowly eat away everything he saved.

      Once I went over his numbers, it was apparent that his monthly mortgage payment had to go. If we could get rid of that, he could keep his home and live out the rest of his life doing the things he loved. The solution was a reverse mortgage, but the thought of doing such a thing was not at all what he wanted to do……until I showed him how it works. I explained to him that for those people 62 years and older, who have enough equity in their home, a reverse mortgage will pay off the existing loan, and from that point on there are no more monthly payments. All one has to do is live in the home and pay the property tax and insurance when due. I let him know that a reverse mortgage is simply a home loan that gets paid back at a future time when a person moves out or passes away. At that point in time the loan becomes due. Over time, the balance increases since there are no monthly payments, but it allows a person to free up much needed money to live life.

      For my Uncle Louie, this was a life altering event that kept him in his home and allowed him to live with dignity for the rest of his life. For the record, a reverse mortgage does not transfer title to the bank. It’s an FHA product with very strict guidelines to keep seniors safe! The process even requires the borrower to have a certificate of completion from a licensed counselor that can be done over the phone. This is primarily to make sure that the borrower is of sound mind and understands what a reverse mortgage is. I can supply a list of counselors to choose from but the point of contact must be between the borrower and the counselor.

     My Uncle Louie never had any regrets about getting his reverse mortgage. In fact, he thanked me on multiple occasions for getting that monthly mortgage payment off his back. If you feel that a reverse mortgage might be right for you, a family member, or friend, please go to my reverse mortgage web site at www.calreversemtg.com. From there you can learn more about a reverse mortgage. It even has a reverse mortgage calculator that can determine if you have enough equity in your home to be eligible. All you need to enter is a birthday of the youngest person on title, the mortgage balance, and the approximate value of the property. Remember, you must be at least 62 and live in the home. Rental properties and 2nd homes do not qualify.

      We are living in a very hostile and scary environment for seniors like my Uncle Louie who were led to believe that social security would be enough when coupled with a retirement. Just so you know, the average mortgage payment in California alone is $2523, and that is expected to rise since interest rates have gone up substantially. The lag time on these types of statistics is often up to 3 or 4 months so expect things to get worse. At the same time, as of the end of 2022, the average social security benefit is only $1688 per month. It’s no wonder that many seniors are feeling the crunch.

      I often talk to clients who desperately need a reverse mortgage, but fail to do anything because they worry about the kids inheritance. They say, “what will be left for the kids if we get a reverse mortgage”. I remind them that the average life expectancy in California is around 79 so if they had kids when they were 25, their kids will be 54 when they pass away. Do kids headed towards 60 need to worry about mom and dad’s net worth. Hopefully they can take care of themselves by then. But despite all this, a reverse mortgage is designed such that there will be equity left for the kids. The gap between the home’s value and the homes loan is huge in the beginning of a reverse mortgage because the lender never wants to see the loan balance exceed the home value. Not to worry, however, because a reverse mortgage is a non recourse loan. This means that if the loan balance ever did exceed the home value, the heirs simply turn over the home to the bank and the bank takes the loss. The banks firm understanding is that although the loan balance increases over time, the homes value should also increase over time to maintain equity in the home. Keep in mind, I’m not saying that a reverse mortgage is for everyone, but for those people who are stuck at home because there isn’t anything left at the end of the month to have any fun……get a reverse mortgage. Life is too short and no one lives forever.

      If you need me for anything, I can be reached at 1 (800) 981-6885.

Sincerely,

John Palmer