Your neighbor (like yourself in her late seventies) recently confided that she is in the process of what her dentist is calling a “rebuild” of her mouth. The six-nine-month long series of procedures, including extractions, surgeries, and dental implants, will improve not only her appearance, but enable her to enjoy eating again. Seeing this friend’s self-confidence so visibly improved, you decided to have her dentist do an assessment of your own mouth and propose a treatment plan. When you reported that you’d left the encounter excited by the possibilities but horrified were horrified by the cost, your neighbor confided that she was using reverse mortgage withdrawals out of the equity in her home to fund her dental work.
While you like the idea of having a ready source of funds, not only to rebuild your own mouth, but to cover any other large medical costs that might arise in later years. Your home has been mortgage-free for a decade and you know it has appreciated considerably in value. Your biggest hesitation in moving forward comes from the fact that you’ve taken pride in having worked hard to become – and stay – debt free. Although neither of your children is in need of – or expecting – financial help from you, the thought of taking on a new, hefty debt obligation is daunting.
A reverse mortgage is about converting an otherwise illiquid asset (it sounds as if it also your largest) into one that addresses a need – or at least a significant improvement in well-being. The potential dental “rebuild” aside, ask yourself – what alternatives are available to you to help defray future medical and dental bills? To what extent would those costs be covered by insurance, including Medicare, supplemental health insurance, and Long-Term Care insurance?
Of course, your friend’s situation may well be different from your own. Is it her intent to “age in place” in her home? Is that your intent for your own home?
Yes, a reverse mortgage is definitely a debt, and all debt needs to be carefully considered – and carefully managed. It’s reassuring to know that Home Equity Conversion Mortgages (or HECMs), unlike other forms of debt, are non-recourse loans, which means you will never be “upside down”, owing an amount greater than the value of the home itself. With a reverse mortgage set up as a “line of credit”, you can make tax-free* withdrawals. Whatever portion of your home equity that has not been withdrawn, meanwhile, will be credited with interest at the same rate as that being charged on the outstanding loan balance. And, so long as taxes and insurance are paid, you may remain in your home as long as you wish.
When, almost forty years ago, reverse mortgages were created, it was specifically to allow older Americans like yourself a way to meet and manage current and future financial contingencies.
Remember the line, “Smile, you’re on Candid Camera”? As is true for your neighbor, your line might be “Candidly, a reverse mortgage can help fund your new smile!”
https://mutualreverse.com/david-garrison
*Please consult a tax advisor. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.orgEqual Housing Lender