Reverse Mortgage Yard Signs
Our team was recently at the Home, Health and Business Showcase at Orchard Creek. It's always a fun time of seeing old friends and meeting new people. We also regularly have experiences where we don't know whether to laugh or cry. It goes something like this: a couple wanders by checking out our table at an appropriate stand-off distance, looking to see if we have any good candy or prizes, then they see our sign with "Reverse Mortgage" prominently featured…they get sort of a startled look, hold out their hand like the Heisman Trophy and mumble something like, "Oh, oh no, we don't need one of those." That's the "cry" part—no one enjoys seeing stereotypes of his or her product perpetuated without even having an opportunity to engage in a fact-based conversation. The implication from those "Heisman" almost-visitors, of course, is that reverse mortgages are for people who "need" them because they have not done a good job managing their money and are now (sadly) forced into a reverse mortgage as a last-ditch effort to stay in the wonderful Sun City Lincoln Hills community. The "laugh" part is us thinking: "If only they knew how many wealthy people get reverse mortgages."
Now, let's be clear: reverse mortgages are not a good fit for everyone. But consider the example of the couple who had an $800,000+ home which they owned outright, plus over $1 million in investments. Why would they possibly be interested in a reverse mortgage? It's about cash flow and options. If they want a few thousand more dollars per month to enjoy the type of retirement they've planned, what are their options? Well, they could certainly sell some stocks each month. True, but the problem might be that they'd no longer own those shares and would miss out on the future gains. They might also sell their interest in some of their small business investments. But the timing could be bad—if they hold out a few more years those investments might really gather steam and pay off handsomely. Another option is to tap the equity in their home (tax-free) using a reverse mortgage. Now maybe in the future, if those small business investments do pay off, our clients will consider paying down their reverse mortgage balance…which will automatically increase their reverse mortgage line of credit…which, by the way, is growing at the same rate that applies to the loan balance. There's no penalty for making payments back to the reverse mortgage, so there are lots of options. Where will they get money to cover future wants and needs…or take advantage of investment opportunities that may crop up? Stock and bond portfolios? ...savings? ...signature loan? ...selling ownership stakes in businesses? …equity from their home? Who knows? It will depend on what's going on in their lives at the time and on current economic conditions. The point is that they want flexibility and an easy option to tap home equity if it makes financial sense for them. If someone told them it's sad that they "need" a reverse mortgage, they would chuckle.
So what about the title of this article? Well, when you get your roof replaced everyone knows it because of the workers crawling all over your house, the giant roll-off dumpster in your driveway and the yard sign that says something like "Another quality job by Hank and Thad Roofing Service!" When people get reverse mortgages, you don't typically see a yard sign out front. [Although our marketing department is certainly interested if you are!] If you think you know who gets reverse mortgages and why, you might be right…but you might just be surprised, too!
Reverse Mortgage Specialist
NMLS ID # 459674
This material has not been reviewed, approved, or issued by HUD, FHA, or any government agency. The company is not affiliated with, or acting on behalf of or at the direction of, HUD, FHA, or any government agency.
Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act; Loans made or arranged pursuant to a California Finance Lenders Law license
Reverse Mortgage Funding LLC, 1455 Broad St., 2nd Floor, Bloomfiled, NJ 07003, 1-888-494-0882. Company NMLS ID # 1019941. www.nmlsconsumeraccess.org. Not all products and options are available in all states. Terms subject to change without notice. Certain conditions and fees apply. This is not a loan commitment. All loans subject to approval.