May 30th, 2017
A Chicago-based personal finance columnist doesn’t just suggest reverse mortgages to her readers — she helped her father get one, with positive results.
Terry Savage, whose columns appear in the Chicago Tribune and other papers around the country, wrote this week about her father’s experience with a Home Equity Conversion Mortgage, which she says helped him age in place with dignity.
She describes an almost perfect HECM scenario: After taking out a reverse mortgage on his condo at age 80, Savage’s father remained at home for the next 15 years, only needing to use his long-term care insurance shortly before his death at age 95. In that time, Savage writes, her father wound up borrowing more than the condo was worth.
“My dad worried about how the balance of the reverse mortgage ‘loan’ was building up, including the interest that was charged on the money withdrawn,” Savage writes. “I had regularly reminded him that they could never force him to move out. I urged him not to worry, live longer — and beat the odds! He certainly did.”
Upon her father’s death, Savage’s family elected to allow the lender to foreclose on the property and handle its sale.
“The family had agreed at the start that we wanted Dad to live there in dignity as long as possible, and we wouldn’t worry about losing the property in the end if he outlived his equity,” she writes. “This is the way a reverse mortgage should work.”
Savage then goes through a detailed description of the reverse mortgage program, advising potential borrowers to only seriously consider a HECM if they plan to remain in the property for at least five years, and if they have savings or income to cover the mandatory obligations. She also points out that the proceeds from a HECM are not typically taxable, and that like her father, borrowers can’t “run out” of home equity or lose their homes as long as they hold up their end of the bargain.
Savage’s column marks another milestone in a streak of positive coverage in the Tribune from syndicated financial columnists; the paper ran a piece by Benny L. Kass extolling the virtues of the HECM line of credit over a traditional “forward” home equity line in March. These articles also represent a contrast from the paper’s recent news coverage of reverse mortgage fraud in Chicago, with the return of noted alleged scammer Mark Diamond to the headlines last week.
“A reverse mortgage is worth considering,” Savage concludes. “I know that firsthand.”