This story “borrowed” from treasured friend, Larry Waters, loan originator long associated with reverse mortgages and featured in Reverse Mortgage Daily recently.
There is the misconception that a person can only be eligible for one reverse mortgage in a lifetime, but the opposite is actually true.
A lot of people aren’t prepared for retirement and are just getting by right now, but with inflation and health care costs continuing to increase, they will realize the need for another option.
Consider this prospect in Spokane, Wash., where she was living alone after her adult children moved away. The woman wanted to sell her home to downsize, but it needed some upgrades, mostly aesthetic things.
Initially, she went to a realtor and at the time, he didn’t even know about reverse mortgages, nor did she. The woman then went to the bank to try to get a regular mortgage, but was denied because she didn’t have the income she used to when her husband was alive.
The bank actually brought up the idea to her about a reverse mortgage.
Over the next five years, she obtained three reverse mortgages.
The first loan was to cover all of the renovations on her home so she was able to sell it for top dollar and move to a smaller home. She took out a set amount of loan proceeds initially and then took the rest in a line of credit. She then took the proceeds she made from selling her first home and paid off the loan and bought a second home in cash.
Once in the second home, the client said she wanted to free up some cash and took out a second reverse mortgage through a line of credit. She didn’t need an income stream each month. She was pretty frugal and only used it when she had unexpected expenses.
A few more years down the road, the woman contacted explained that she wanted to move again because she didn’t like her neighbor. There were also new homes being built downtown that were built specifically to accommodate seniors.
Again, she was able to pay off her last reverse mortgage and the result was a third reverse mortgage. This time the loan was a HECM for Purchase.
With each reverse mortgage she also was responsible for paying all of the closing costs and other fees.
People need to know that a reverse mortgage isn’t necessarily a one and done deal, A lot of times they think it’s the last thing that they’ll do, but sometimes things change and they want to move. It can work for five or 10 years and then could possibly help them again to downsize or move to another location.
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