Dorothy is a widow in her 80’s, and Dorothy was running out of money. She has a beautiful home with a lovely backyard(I saw 3 deer when I came to visit, and a fox right after closing). All Dorothy wants to do is live in her home for the rest of her life. Watch her interview below to see how a reverse mortgage got her there.
Dorothy and her husband did everything right for years. They raised wonderful children, took care of themselves, and over time paid their mortgage down to 0. When Mr. D passed, Dorothy had to “re-boot” and tweak her habits. Suddenly, the FAMILY fixed income was down to just Dorothy’s fixed income(which wasn’t a ton to write home about).
Behind Dorothy’s fixed income were some investments. Just like a good number of seniors, Dorothy and Mr. D had saved over the years, and now she had a nice little nest egg🥚 to live off.
But one year turned into 5 years, which turned into 15 years. Time flew by for Dorothy as it does for all of us.
In those years, Dorothy kept picking at her investments. She needed to pay taxes(the property taxes in Dorothy’s neck of the woods are OUT OF CONTROL), she had to maintain the property, and she had grandbabies to treat😍
Then, she needed a new roof. After paying for the roof, Dorothy was concerned. She reviewed her finances with her attorney, Rosemarie, who just happens to be a financial whiz👩🏫
Rosemarie was worried that Dorothy was in real danger of her money running out while she was still alive, so she recommended that Dorothy look into a reverse mortgage. Rosemarie’s goal was to fortify Dorothy’s bank account; she wanted Dorothy to have enough money so that she wouldn’t have any more financial worries…no matter how long she lived.
Dorothy had heard all sorts of negative talk about reverse mortgages, so she brought a financially astute friend in for our first meeting. Some of the questions they both had(and my answers) were…
❓ How can I get my money?
✅ While you can get your money up front in a lump sum, monthly in annuity style payments, or in a credit line, Dorothy chose to take a partial lump sum to replenish her bank account. Then, she left another portion in a reverse mortgage line of credit that actually grows tax free over the years.
❓ Does the bank own my home, or do I keep it?
✅ This is a question that many folks have. Dorothy stays on the deed and the reverse mortgage is just a lien on title(just like any old mortgage). She has full control of the home.
❓ Can my kids get my home when I pass?
✅ Another great question! When Dorothy passes, her home will be passed down to her heirs. They’ll get the house, and they can either sell it, refinance it, or pay it off in cash. Dorothy’s kids don’t want the house though, so they’ll sell it, the reverse mortgage company will get paid back, and Dorothy’s kids will get the left over money.
❓ If I get a reverse mortgage, is there any way I can lose my home?
✅ Yes there is. Dorothy needs to keep up on her property taxes and homeowners insurance, and if her (new) roof blows off the home, she needs to replace it. With that said, Dorothy IS a responsible homeowner, and has consistently paid her taxes on time. And there are no reverse mortgage police who will ever check on the home’s condition(after the initial appraisal of course).
❓ How much money can I get?
✅ I’m not going to share exactly how much money Dorothy received, but we qualify folks based on their age and the value of their home. A senior of Dorothy’s age gets between 60-70% of her home’s value. The rest of the equity stays in her home.
❓ So why is there so much negativity about reverse mortgages?
✅ Well, up until about 5 years ago, reverse mortgages weren’t really safe for some people. Anybody who was 62 or older and had equity in their home could get one. There were no other qualifying requirements. Problems came in when irresponsible people(or folks who couldn’t afford to keep up on their bills) took reverse mortgages and didn’t pay their property taxes.
Since May of 2015, reverse mortgages have changed for the better. We make sure that seniors have a history of on time payments AND that they can afford their senior living expenses. If they can’t we may be able to hold a LESA(lifetime expectancy set aside) where we pay their property taxes and homeowners insurance for the rest of their life expectancy. If that doesn’t work, we’ll turn the loan down.
Below is a video interview that I did with Dorothy. It’s pretty casual and short. But check it out and let me know what you think. Of course, if you’d like more information feel free to reach us at jasone@reversemortgagereality.com or (267) 289 1095.