The COVID-19 pandemic crisis drove banks to offer forbearance programs that provide temporary relief from making mortgage payments, but new attention is on reverse mortgages that provide permanent relief among other benefits.
Homeowners flocked to take advantage of forbearance offerings earlier this year which enabled them to defer making monthly mortgage payments for a few months. Without question, this was welcome relief for many coping with the unexpected shocks and financial insecurities created by the pandemic crisis.
Now, reality is setting in as those deferral programs are winding down, and the obligation to resume mortgage payments is around the corner. So, helpful as it was, the remedy is ending but the dilemma continues. In this regard, aging homeowners (60 and older) have an advantage.
Reverse Mortgages Provide Permanent Payment Forbearance
Savvy financial professionals are advising aging clients to consider the advantages of refinancing to a reverse mortgage for several timely reasons:
- Improve Cash flow – Monthly payments are not required. They are optional not mandatory.
- Increase Financial Resources – Convert frozen equity to cash and/or a growing line of credit for future needs without selling, moving, or giving up home ownership.
- Program Choices – The HUD/FHA insured Home Equity Conversion (HECM) reverse mortgage or new proprietary (Jumbo) programs are available.
- Eligible Properties – Primary residences including condominiums.
- Guarantees – Loan terms and funding cannot be frozen or cancelled as long as the loan remains in good standing.
- Timing – 2020 record low interest rates and soaring home values increase funding amounts.
Reverse Mortgage Suitability – Good for Some, Not for All
To determine if a reverse mortgage is a good fit depends on individual situations and circumstances, considering near and longer term financial and personal factors.
Like any mortgage loan, reverse mortgage borrowers have responsibilities to keep the loan in good standing. These responsibilities include, but are limited to:
- Keeping real estate taxes, homeowner insurance, and property charges current.
- Providing basic home maintenance.
- Living in the property as primary residence.
To Learn More
Investigate the options and consult with qualified and knowledgeable professionals to objectively assess your situation and explain the choices. Too often, well intended, but uninformed, friends and family provide inaccurate and misleading advice. The decision is too important. Learn if it may be a good fit for you, or if not, why not.
Visit reversemortgage.org, the website of the National Reverse Mortgage Lenders Association (NRMLA) for in-depth information about reverse mortgage as well as links to qualified lenders and Certified Reverse Mortgage Professionals (CRMPs) in your area.
CRMPs are the industry’s elite exam tested and experienced reverse mortgage professionals who have committed to NRMLA’s rigid Code of Ethics and Professional Responsibility.
George Downey (NMLS 10239), is a Certified Reverse Mortgage Professional (CRMP) and the founder of Harbor Mortgage Solutions, Inc., Braintree, MA, a mortgage broker licensed in Massachusetts (MB 2846), Rhode Island (20041821LB), NMLS #2846. Questions and comments are welcome. Mr. Downey can be reached at (781) 843-5553, or email: GDowney@HarborMortgage.com