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Alex J. Esq.
Alex J. Esq., Attorney at Law
Category: Legal
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Experience:  Experienced Licensed Attorney
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I am considering taking out a reverse mortgage on my home.

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I am considering taking out a reverse mortgage on my home. I am 72 years old and recently widowed. The house was built in 1953 and has an existing mortgage of a little over $288,000 from a refinance needed to put in new windows, siding and a new roof among other needful repairs. According to my daughter, the house is listed on Zillo at $325,000.

My husband left me a little over $200,000 in life insurance which is obviously not sufficient to satisfy the mortgage. I will be getting a rise in my Social Security payments and I believe something from the pension into which he was paying at the time of his death (he was still an active employee). Unfortunately, I don’t know the amount of that yet, but certainly between the monthly payments I am making for ordinary expenses (utilities, credit card debt etc.) and the $3,000+ monthly mortgage amount, this money will be eaten up long before the mortgage is satisfied. At that time I will be forced to sell my home and deal with trying to find living accommodations, not easy in these times or on Long Island where I presently live.

I have cut down my monthly expenses greatly. I no longer have my husband’s car and the expenses it incurred including the car loan, insurance, gas etc. He had several credit cards in his name which he ran way up; these have now been declared closed by the credit card company after I handled the matter with your assistance. The only real threat to my financial situation is the mortgage and a reverse mortgage will clear that up. And I should certainly have enough to pay the taxes and the house insurance required in a reverse mortgage situation especially as I continue to cut down on my monthly outlays.

I went to a seminar and learned about the matter and it appears that there are no real pitfalls in doing this. I must live in the house (which I intend to do) and the reverse mortgage must be satisfied only after I have been out of the house for a year (in a nursing home or some other situation). At that time, I will have a year to sell the house to satisfy the mortgage and frankly, given that it takes about five years to actually foreclose on a mortgage, that means I would effective have SIX years to sell the house. Of course, if I die, to be honest I really won’t CARE what happens, so I do not intend to concern myself with that situation.

At the seminar I was also informed about how to go about getting this mortgage including “up front” out of pocket costs – the “FHA counseling and the need for an evaluation on the home – both of which I can afford and both of which the company giving the presentation reimburse at the time of closing.

Frankly, I can see no drawback in this plan other than finding out that I do not qualify for some reason which I would assume would have to do with the size of the outstanding mortgage and the value of my home. I can live on my income backed up by my husband’s life insurance as long as I can get rid of the existing mortgage in a reasonably short time before it makes too many inroads on the money I have from his life insurance – something that a reverse mortgage will certainly do. I cannot guarantee that there might not be some problem in the future, but at 72 I don’t have that much “future” and certainly if the current mortgage remains in place, I can be assured of running out of money perhaps before I run out of life.

I need to know if I am missing something that would make this option problematic. Obviously, the gentleman making the presentation was very “high” on it; that is to be expected. However, he was asked a lot of hard questions and seemed to have all the answers. There are no guarantees in life, but as I consider the existing mortgage to be my biggest problem and I do not have sufficient funds to satisfy it myself, this seems to be the best way to find peace of mind in my old age. I need to know if I am missing something that I should know before I go further.

Thank you.
Hello. My name is XXXXX XXXXX I will be happy to answer your question.

Did you try to pre-qualify for this reverse mortgage?

Also, generally reverse mortgages would only be offered to senior homeowners who have at least 50% equity in their home.
Customer: replied 3 years ago.

I have not yet tried to qualify and you are right, it may be that I will not qualify. I will be speaking to the gentleman who gave the presentation on Thursday. Obviously, qualification is the big question and as of yet, I have no answer. Equally obviously, if I do NOT qualify, then the whole question is moot and I am back to dealing with a problem for which I can see no real answer other than my worse fears. If, however, the only problem is the equity, and I am able to get around that, is there any other problem I should consider?

Dear Valerie,

Thank you for your follow up.

Generally, reverse mortgage can be a good solution for a senior homeowner who is not concerned about depleting the equity in her/his home and is not concerned about leaving the house as part of the inheritance for children or relatives.

Not only reverse mortgage can make payments on the current mortgage, but also if there is enough equity in the house, the senior owner can receive payments from the reverse mortgage every month, to supplement his/her retirement.

Reverse mortgages have been around for a while now and there are many elderly homeowners who were able to utilize them in order to support their way through the retirement and while the reverse mortgages do work for many seniors, any reverse mortgage agreement should be reviewed by an experienced local real estate attorney, who would be able to actually review the specific terms of a reverse mortgage agreement in your case and would be able to advise you whether there are any legal or financial issues that you should be concerned with, before signing the agreement and taking out reverse mortgage.

I wish you the best of luck!
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