The Golden Years, in reverse

What many people have now -- house, lifestyle, neighborhood, friends, church, clubs -- is exactly what they'd like to keep.

Unfortunately, many older folks simply don't know how or where to look to find the funds that would allow them to maintain the status quo. The immediate need for seniors now is supplementing the income to provide the standard of living they desire.

In the past, the typical reverse mortgage was taken out by a single woman, 75, who needed funds to fix up her home so she could comfortably age in place. Reverse mortgages now are also being used to support a more well-to-do routine.

For example, Frank Williams, 77, and his wife, Carla, own 35 weeks of timeshares each year in five different timeshare systems. They work points, bonus time and favored status like some people work airline miles. They know how to successfully maneuver through each different organization to gain the maximum overall benefit. They are actively filling in their timeshare schedule into calendar year 2022. Now that's organization!

The Williamses took out a reverse mortgage on their principal residence in New Mexico not to buy more timeshare weeks, but to make sure they didn't have to skimp getting to them, or cut back on activities once they arrived.

"I know a lot of people are skeptical about reverse mortgages, but it worked for us," Frank said. "Our friends want to leave everything they have to their kids, and that's OK. But we're not primed to punish our kids by spending all of our money. Our kids are doing fine -- they own their own homes, and would rather see us enjoy the rest of our lives."

Consumers can choose how to receive the money from a reverse mortgage. The options include a lump sum, fixed monthly payments (for life), a line of credit, or a combination of the above. The most popular option, chosen by more than 60 percent of borrowers, is the line of credit, which allows consumers to draw on the loan proceeds at any time.

The size of the reverse mortgage depends on age at application, the loan type and home value. In general, the older the consumer and the more valuable the home (and the less amount owed), the larger the reverse mortgage.

A reverse mortgage can be viewed similar to a home equity loan but without a monthly payment. Owners do not repay the loan as long as the home remains the principal residence. Income and credit rating are not considered when qualifying for the loan. There is no requirement that owners requalify during the term of the reverse mortgage, yet property taxes and home insurance must remain current. ...CONTINUED

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