Let me start by saying my mother was in a great position 4 years ago, she set herself up well for retirement. The only nagging thing to me at that time was other than living halfway across the country from me, was that she was still making a monthly mortgage payment at 77 years old. So, I asked her if she would like to see how a reverse mortgage could work and benefit her. In my mother’s fashion she said, “I don’t need the money”. I responded with “Shush don’t ever say that out loud!” We talked and she and my brothers agreed that it would be better to have it and not need it than to need it and not have it. So we went on a trek that I was not totally prepared for but realized how necessary it was. For a few different reasons none of us (me and my 2 brothers) had ever really dove into her finances with her. In my business I am ashamed to say I didn’t practice what I had preached. I knew what I would find, and I was pleasantly not surprised that she was “comfortable”. With that said, “you can never have too many safety nets”. We deployed the HECM for my mom and she has lived in her home without a monthly mortgage payment* saving thousands of dollars for over 4 years now.
Fast forward to present day. We packed up 20 years of her life in a “Pod” and shipped it off! Mom and I took the 1600-mile drive together after the Christmas holiday to the 3rd city she would live in her entire life. Her home was put on the market and under contract in 12 days. Here is what I want to illustrate for you. She lived in her home for the last 4 years without making a monthly mortgage payment.* She saved that money, she spent some of that money, she did with it as she pleased, and lived her best life which she continues to do. Most people think of a reverse mortgage as an “Equity Stripper”. My mom is a living example of how that is just a myth. Take a look at these points:
- Mom would have spent 6 figures over the last 4 years paying her monthly mortgage payment.
- Mom’s home would not be worth any more money if she had a conventional or no mortgage than it is now with the reverse mortgage.
- She would still have had a balance on a regular mortgage.
- She would still be paying property related charges just like she does now but on top of the principal and interest of a mortgage.
- She had a safety net created by the money she saved on the monthly mortgage payment* that was no longer required.
- It never negatively affected her credit rating in any way.
- When she closes the sale, she will net 6 figures which will, if needed cover her living expenses for a very long time.
This is just one scenario, but it is the most important one to me. This mortgage freed up cashflow, helped bolster savings and investments, and let my mom live in her home until she no longer wanted to. The Reverse Mortgage (Home Equity Conversion Mortgage) worked just as designed and just as planned.
Donald Battista, NMLS ID 2030959. *Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Arizona Mortgage Banker License 0926603. Florida Mortgage Lender Servicer License MLD1827. Louisiana Residential Mortgage Lending License 1025894. Oklahoma Mortgage Lender License ML012498. Texas Mortgage Banker Registration 1025894. 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.org | Equal Housing Lender