Restrictions placed on today’s HCEM reverse mortgage by HUD have made it almost impossible for many potential borrowers to qualify for enough proceeds to make the reverse mortgage a viable option.
Reductions in the initial loan amount—coupled with the newly enacted “financial assessment requirement”—have leveled a one-two punch to seniors and have knocked the program out of contention as a possible solution.
If you looked into a reverse mortgage because you can no longer afford the cost of maintaining your home and pay for your living expenses, you have 4 options to consider:
Tap your kids to pay your expenses.
Seriously, many seniors today make a deal with their kids to pay monthly expenses in exchange for the inheritance of the house later. It’s a type of “family-financed reverse mortgage.” Since transactions involving money and property between family members can turn into a nightmare down the road, several companies specialize in managing the transaction to ensure all parties are equally and legally protected. These companies insure that family members have an unbiased third-party arbiter, in case one side doesn’t perform as agreed.
Sell the house and move in with a family member.
This is usually the least desirable option. Most seniors would rather live in a shelter than move in with their kids. Nothing robs them of their independence and self-respect faster than leaving their home to live under one of their children’s roofs. Those of us who have raised children have all used the phrase “as long as you’re under my roof you will live by my rules!” When a parent moves in with the child, that dynamic gets turned upside down. There is certainly a risk of losing control over you environment because you no longer have your own environment.
Sell your home and move.
A third option is to simply sell the house and move. Sounds easy, right? It’s actually more complicated than it sounds.
What if …
… the house is not in condition to attract a buyer?
… the house needs a number of expensive repairs to make it marketable?
… you simply don’t have the money to bring it up to marketable standards?
Or, more importantly, where do you go after you sell? The thought of leaving the home you’ve lived in for years or the community you are a part of can be overwhelming. A survey of seniors showed that almost 90 percent wanted to stay in their homes until they either die or are unable to care for themselves.
Sell your home, but continue to live in it.
You can liberate the equity in your home by selling it, then renting from the buyer. My company has created a program designed to help seniors stay in their homes, while also providing a good business deal for our investors.
Here’s what I mean: You want to remain in your home, and you’re no longer concerned if the deed to the home is in your name. Our investors want to invest in real estate, and they know the best prospective property is one that already has a tenant who takes care of the property and has the means to pay rent on time. What better investment opportunity than one where the seller is also the tenant and has an emotional attachment to the property? We believe this is the definition of a win-win transaction.
Each of us has unique situations and challenges to overcome when a reverse mortgage doesn’t go through as planned. And unfortunately, there are never cut and dry answers that fit every circumstance. That’s why I encourage you to set up a call time with me so I can help you determine your next best steps.
Click here to set up a risk-free strategy call with me. You pay me nothing; it’s a free call. During our conversation, we will talk about your unique situation. I’ll point you to resources that can help. I look forward to hearing from you.
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