Reverse Mortgage

For most, the mere mention of Reverse Mortgages elicits a visceral and repugnant response, if any response at all.  There really is no “in between”.  Unfortunately these unfavorable perceptions are causing millions of seniors to miss out on an incredible, life changing opportunity that can transform the outcome of their final chapters of life, and setup a lasting legacy for their children and grandchildren. Additionally, the real estate industry is mostly ignoring a brilliant solution to an inventory shortage problem, as millions of retired Baby Boomers remain in their home with little other home purchasing options. 

 

I sat down with Jim Blythe and Kristy Osborn, Reverse Mortgage experts with Fairway Independent Mortgage, and what they shared was immensely inspiring.

 

But first, why does the utterance of a Reverse Mortgage – a loan available only to senior citizens 62+ that turns a portion of the equity of their home into cash – turn so many people off?  Jim and Kristy contribute it to a lack of knowledge and a scarcity of experienced lenders who specialize in reverse mortgages.  Reactions to Reverse Mortgages stem from a variation of the product that was offered decades ago, one that often caused harm to those senior citizens that used them. On the other hand, today’s Reverse Mortgages have been totally revamped and have the backing of the U.S. government through the Federal Housing Administration.

 

In addition, there is now a Purchase Reverse option that allows seniors to purchase homes they would otherwise not be able to qualify for with traditional mortgage financing (because of income requirements). They can achieve this without having to take out hundreds of thousands of dollars from their retirement accounts – if they even have any. “95% of Americans have no retirement plan beyond social security,” Jim mentioned.  A staggering statistic, especially with the solvency of that program in question.  Many of these seniors are not trying to purchase homes to move up to the bigger and better, or latest and greatest.  They may simply want to move closer to their grandkids or downsize (or “right size,” as Kristy calls it) into a different home for a new season of life. “So many people in this city are sitting on so much equity in big houses they don’t need,” Kristy added, “and we can use a Reverse Mortgage to get them into the right-sized home, near their family, with extra cash in their retirement.” 

 

There are many misconceptions about Reverse Mortgages out there, such as: the senior no longer own their home, the senior deeds the title to the bank, the Reverse Mortgage prevents future selling of the home, or that they will be leaving their family with a massive debt to pay after they are gone.  None of these are true.  The borrower still owns the home like any mortgage, but the Reverse Mortgage is a non-recourse loan, meaning that it is impossible to upside-down.  So, there is no financial burden passed down to loved ones. 

 

Ultimately it is a financial tool nearly every senior can use to improve their financial security in retirement.  Jim explained, “We don’t just hand them a big pile of money; we help them create income and reserves, pay off debt and mortgages, and create a legacy.” Kristy added, “More than 50% of seniors don’t have a financial advisor, so that’s usually a first step. We have to get them connected with someone who can help guide them in how to invest and use their resources.”

 

It was this passion from Jim and Kristy, and their harrowing stories about the seniors they have helped and how they helped turn things around for them – literally saving lives – that left me in awe.  Jim and Kristy have made it their mission to transform how their senior clients think about money, retirement, and homeownership through Reverse Mortgages. 

 

Kristy realized this special love and calling to serve senior citizens three years ago and became certified in Reverse Mortgages. “I jumped in and never looked back,” Kristy said, “I just love this work and the people I serve.” Jim’s story with Reverse Mortgages started in 2004 as a radio talk show host. He began explaining the program, and almost immediately, “the phone lines lit up,” Jim said, “There was a tremendous hunger among people to learn more about the reverse mortgage program.”

 

Jim continued on to become a specialist in FHA, VA, and reverse mortgages while becoming a certified senior advisor (CSA). In addition, he organized the first local chapter of the Society of Certified Senior Advisors in the US, underscoring his passion for serving this community and putting systems and people in place to ensure their money empowers them and their families. Both he and Kristy agreed that the best part of their job is getting to meet so many people with colorful stories.  In fact, Jim has recorded many of them in his book, Challenges of Change: Adventures in Victorious Senior Living. 

 

Further underscoring his passion and commitment to his clients, Jim has his pilot’s license and flies his own plane to all of his clients’ homes in rural areas across eight states where he meets the families, inspects their homes for program eligibility, and often creates a financial literacy plan for the entire family. “It’s not about getting people access to a bunch of money, it’s about teaching them how to use it and create a sustainable legacy for their families.” Jim said.

 

At Fairway, Jim and Kristy have come together to work together on spreading the good news about Reverse Mortgages and changing the hearts and minds of those that may fear or doubt it. One of the greatest allies that Jim and Kristy have to communicate these benefits to the masses is through referral partners and industry colleagues. “I work with financial planners, home care providers, Realtors, and estate attorneys to ensure this program finds its way to the right people.” Kristy mentioned. “And Jim does more consumer-direct promotion through his radio show as well as works with local banks and credit unions, CPA’s, as well as financial planners.”  By working with these partners, Jim and Kristy aren’t just looking for more clients to provide Reverse Mortgages for; they also offer more holistic options to their senior clients.

 

Both Kristy and Jim view their work as a privileged calling and see it as their duty to not only protect a historically vulnerable population but to set seniors and their families up for generational financial success. If you have questions about the program or think a reverse mortgage might be an option for you, or your clients, Jim and Kristy encourage you to connect with them and begin that exploration process together. Jim can be reached at jim.blythe@fairwaymc.com, and you can find Kristy at kristy.osborn@fairwaymc.com

 

Reverse Mortgage Facts:

  • Reverse mortgages were introduced in the early 1960s. It wasn’t until 1988 when FHA insured these mortgages – like a traditional mortgage.
  • You will not be giving up the deed to your home. The deed is still in your name so you may move whenever you want.
  • Same as a traditional loan, as long as all terms are met, you cannot be forced to sell your home and move.  
  • In Texas, borrowers must be 62 or better and the home must be a primary residence with equity.
  • Your home will not be taken away when you pass away – your heirs have options.
  • Your home does not have to be debt-free to qualify for a reverse mortgage. 
  • Your heirs will not be stuck with a big mortgage. This loan is a non-recourse, FHA guaranteed loan. 
  • A reverse mortgage is a great way to add cash flow for a borrower 62 and better.
  • Borrowers must still pay taxes and insurance and maintain the home.

* Most but not all reverse mortgages are Home Equity Conversion Mortgage – HECMs, and are only available through and FHA-approved lender. These facts apply to HECM loans only.