A Personal Look at a Reverse Mortgage
If you had told me five years ago that I would soon be receiving monthly payments from a reverse mortgage, I wouldn't have believed you. For one thing, I didn't need extra money. My Social Security checks along with my late husband's V.A. benefits more than covered all my expenses. More importantly, I'd heard so many confusing and unsettling things about reverse mortgages. I'd been told that the government could take my home from me, or that I could end up owing more than my home was worth. I had a lot of concerns, but I also had very good motivation to learn the facts.
Before I ever considered a reverse mortgage, I was already looking into my finances. My granddaughter Emma had been accepted early to an art college, and while I knew my daughter and her husband wanted to send Emma, I also knew their finances wouldn't allow them to do so. I wanted to see if I could help out, despite my fixed income.
Then something happened that none of us expected. While working in my garden, I fell and broke my wrist. Suddenly, I was overwhelmed with medical bills that I hadn't planned for. As I began to recover and take stock of my situation, I was disappointed to realize that helping Emma would now be out of the question.
I was most surprised when, upon mentioning my situation to my physical therapist, he asked me if I owned my home and then suggested that I look into a reverse mortgage.
"But I don't want to lose my home," I told him. He explained that many of the negative rumors about reverse mortgages were
untrue. He assured me that my name would remain on the deed and that I could continue to live in my home for as long as I wanted. He also told me that as long as I did continue to live there, I would not have to make any payment toward the money I was borrowing. I could receive the money as a lump sum, monthly installments or a combination of the two, and I could use it for whatever I wanted, from regular monthly expenses to my unexpected hospital bills, even to make Emma's tuition payments or to donate to charity. It would be entirely up to me.
"You do have to complete a third-party educational session," he told me. "The people who teach those sessions aren't associated with the company administering your reverse mortgage, so they can give you unbiased advice about whether a reverse mortgage is right for you, and they'll answer any questions you may have."
I began researching right away. I found out that most homeowners over the age of 62 have a good chance of qualifying for a reverse mortgage. The age of the borrower, the value of the home, the home's location and any amount owed on the home are among several factors that determine how much an individual qualifies to receive from their reverse mortgage. And most importantly, I learned that my home would remain my own, just as my physical therapist had told me. The reverse mortgage would become due and payable only if I moved out or if I passed away, at which point my family could choose to repay the money, or else the house could be sold to repay the loan. By law, I could never be held accountable on the reverse mortgage for more than my home was worth.
Today, Emma is about to enter her second year at art school. I make about two-thirds of her quarterly tuition payments out of the funds I receive from my reverse mortgage. Also thanks to the money I'm receiving, I was able to pay off the medical bills from my wrist fracture in just a few months. I use the leftovers for many things. I've taken a vacation here and there. I've donated to a few of my favorite charities, and with spring right around the corner, I think I may soon put an ad in the paper for a gardener.