Reverse Mortgages For Seniors On Fixed Income

ANCHOR: FOR MANY SENIORS, STAYING IN THEIR HOME IS A TOP PRIORITY. BUT SOMETIMES, YOU JUST DON’T HAVE THE CASH YOU NEED TO KEEP YOUR HOME FIXED UP OR PAY THE LIGHT BILLS.

ANCHOR: WGN’S FINANCIAL REPORTER ILYCE GLINK IS HERE WITH A WAY YOU MIGHT BE ABLE TO STAY IN YOUR HOME FOR THE REST OF YOUR LIFE.

ILYCE: FOR MANY SENIORS LIVING ON A FIXED INCOME, EACH MONTH BRINGS THE IMPOSSIBLE DECISION OF WHETHER THEY’RE GOING TO MAKE SOME NECESSARY HOME REPAIR – LIKE, FIX THE LEAKING ROOF – PAY THEIR BILLS, OR PUT FOOD ON THE TABLE. BUT NOW, THERE MIGHT BE ANOTHER WAY. A REVERSE MORTGAGE MIGHT ACTUALLY ALLOW YOU TO LIVE OUT YOUR REMAINING YEARS COMFORTABLY … IN YOUR OWN HOME.


Pearlie Hutchieson outside her house: “The gutter on the upper level had fallen down on the front”

SOMETIMES HOMES NEED FIXING UP.

PEARLIE HUTCHIESON INSIDE HER BATHROOM: “This section here I had to put in 3 times”

BUT FOR SENIORS LIVING ON A FIXED INCOME, EVEN NECESSARY HOME REPAIRS AREN’T IN THE BUDGET.

PEARLIE HUTCHIESON — “I GET 300 PLUS CHANGE. AND IT’S DIFFICULT TO PAY A LIGHT BILL [AND WE’RE ALL ELECTRIC IN OUR HOUSE AND] THE LIGHT BILL IS WHAT SOME PEOPLE WOULD PAY FOR A MORTGAGE ON A LOWER INCOME LEVEL”

ROBERT AMFT WALKING THROUGH HIS ART-FILLED APARTMENT: “I WOULD HAVE HAD TO GET A HUGE STORAGE SPACE.”

RETIRED SINCE 1986, ROBERT AMFT WAS LIVING COMFORTABLY OFF OF SOCIAL SECURITY, HIS RETIREMENT FUND, AND THE OCCASIONAL SALE OF A PAINTING. UNTIL THE BOTTOM FELL OUT OF THE STOCK MARKET.

ROBERT AMFT: “ALL OF A SUDDEN IT WENT DOWN TO HALF ITS VALUE AND I COULD SEE I WASN’T GOING TO BE ABLE TO STAY THERE MUCH LONGER BECAUSE I DIDN’T HAVE TOO MUCH IN THE BANK.”

UNTIL RECENTLY, SENIORS LIVING ON A FIXED INCOME WOULD HAVE HAD TO SELL THEIR HOMES AND MOVE. TODAY, SENIORS WHO OWN THEIR OWN HOMES CAN TAP THE EQUITY THROUGH A LOAN PRODUCT CALLED A REVERSE MORTGAGE, WHICH ALLOWS THEM TO RECEIVE UP TO 65 PERCENT OF THEIR HOME’S VALUE IN A LUMP SUM OR IN MONTHLY PAYMENTS.

STAN ALLEN, REVERSE MORTGAGE COUNSELOR: “THE ONLY REQUIREMENTS ARE THAT THEY MUST BE 62 YEARS OF AGE OR OLDER, THEY MUST OWN A PROPERTY, AND THEY MUST OCCUPY THE PROPERTY AS THEIR PRIMARY RESIDENCE.”

FOR SENIORS ON A TIGHT BUDGET, THE BEST PART ABOUT GETTING A REVERSE MORTGAGE IS THAT YOU DON’T PAY ANYTHING BACK UNTIL THE HOME IS SOLD.

STAN ALLEN: “THEY ARE GUARANTEED TO BE IN THAT HOME FOR THE REST OF THEIR LIFE, NO MATTER WHAT, PROVIDED THEY CONTINUE TO PAY THEIR TAXES AND HOMEOWNERS INSURANCE.”

ROBERT AMFT: “I THOUGHT, WHAT A GREAT IDEA.YOU’VE PAID YOUR MORTGAGE AND YOU HAVE THAT LUMP OF MONEY THERE, THAT EQUITY, JUST SITTING.”

BUT MANY SENIORS DON’T KNOW REVERSE MORTGAGES EXIST. OR, THEY WORRY ABOUT USING UP THEIR CHILDREN’S INHERITANCE. INSTEAD, YOU RETAIN OWNERSHIP OF YOUR HOME, WHICH SHOULD CONTINUE TO APPRECIATE IN VALUE, AND ALLOW YOU TO PASS DOWN AS MUCH AS 35 TO 40 PERCENT OF THE ULTIMATE SALES PRICE TO YOUR HEIRS.

THE INITIAL COST OF A REVERSE MORTGAGE MAY SEEM HIGHER THAN A CONVENTIONAL LOAN. BUT COSTS ARE CAPPED AT 2 PERCENT OF THE LOAN AMOUNT, AND THE LOANS ARE REGULATED BY THE FEDERAL GOVERNMENT, WHICH PROTECTS YOU AND YOUR HEIRS.

PEARLIE HUTCHIESON: “THE REVERSE MORTGAGE HAS ENABLED ME TO, LET’S SAY, BREATHE.”

STAN ALLEN, REVERSE MORTGAGE COUNSELOR: “IF THEY ARE OF THE POSITION WHERE WE HAVE READ MANY TIMES OF SENIORS EATING CAT AND DOG FOOT TO SURVIVE, THE REVERSE MORTGAGE IN AN IDEAL VEHICLE TO BRING THEM BACK TO A NORMAL LIFESTYLE.”


TAG: REVERSE MORTGAGES OFFER A VIABLE OPTION TO SENIORS STRUGGLING TO MAKE IT WORK ON A FIXED INCOME, OR THEIR CHILDREN, BOOMERS IN THEIR 30S AND 40S, WHO ARE HAVING TO HELP THEIR PARENTS OUT EACH MONTH FINANCIALLY. THE BEST PLACE TO GO FOR MORE INFORMATION IS RIGHT HERE, A BOOK BY KEN SCHOLEN, THE GUY WHO INVENTED THE CONCEPT OF REVERSE MORTGAGES. HIS BOOK IS CALLED “YOUR NEW RETIREMENT NEST EGG,” WHICH IS AVAILABLE ONLINE OR AT YOUR LOCAL LIBRARY. WE’LL LINK YOU TO IT AT MY WEBSITE, THINKGLINK.COM AND AT WGNTV.COM.

FOR MORE INFORMATION:

Homepath.com (Fannie Mae’s site)

HUD.gov (Federal Housing Authority)

WellsFargo.com

AARP.org (American Association of Retired Persons)

Jan. 23, 2003


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