If you are 62 or older, own your home, hope to do so someday, or have an elderly parent or relative, studying “Reverse Mortgages for Dummies” by Sarah Glendon Lyons and John E. Lucas can be the most profitable time you will ever spend.
This new manual for senior-citizen homeowners who are “cash challenged” shows how to tap home equity to provide lifetime monthly income, a lump sum, or a credit line (except in Texas) which doesn’t have to be paid back to the lender until the owner moves out for more than 12 months, the home is sold, or the owner dies.
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The authors anticipate questions readers want answered about reverse mortgages, which pay money to the senior-citizen homeowner (just the opposite of customary home loans, which require payments to the lender).
Right up front, Lyons and Lucas emphasize (a) the lender doesn’t take title to the home, (b) the homeowner can never lose their home even if they outlive their home equity and life expectancy, and (c) the lender has no recourse against assets other than the residence when it is sold or the owner dies.
Especially valuable are the comparisons of the three major reverse mortgage lenders: FHA(HECM), Fannie Mae and Financial Freedom Plan. Separate chapters explain the pros and cons of each lender’s reverse mortgages.
Considerable emphasis is placed on the requirement of all three major lenders that the senior citizen consult a professional and independent “reverse mortgage counselor” before the reverse mortgage is approved. The book explains this local counselor can be consulted either in person (highly recommended) or by phone interview to obtain the required certificate to be sure the homeowner understands their choices.
A major portion of the book is devoted to the adult children of senior-citizen homeowners. Lyons and Lucas don’t hide the fact the senior-citizen homeowner will be spending his/her home equity, thus reducing the heir’s probable inheritance. This section of the book includes an explanation of the durable power of attorney and when its use might be needed in the event of the parent’s severe stroke, Alzheimer’s disease or dementia.
If the book has a defect, it is the very sloppy proofreading by the publisher. Sometimes the sentences don’t make sense. The worst lapses involve outdated FHA and Fannie Mae loan limits (but correct in other chapters) and a partial example about “Annie” where readers never get the full story about her jumbo cash account.
But the book’s content quality more than makes up for the publisher’s poor editing. The authors compare the pros and cons of each reverse mortgage type, explain how the procedure works to obtain a reverse mortgage, and then emphasize the roles of professional counselors and adult children who are concerned about their elderly parents.
Chapter topics include “Figuring Out the Reverse Mortgage Basics”; “Deciding Whether a Reverse Mortgage is Right for You”; “Repaying Your Loan”; “The Home Equity Conversion Mortgage”; “Figuring Out the Fannie Mae Home Keeper Loans”; “Jumping into Jumbo Cash Accounts”; “Seeing a Counselor”; “Your Originator”; “Getting Appraised”; “Closing”; “Supporting Your Parents”; “Knowing the Impact of a Reverse Mortgage on Your Inheritance”; and “Getting a Durable Power of Attorney.”
This is the best of the several excellent books explaining reverse mortgages. It is filled with vital facts and not much in the way of opinions from the authors who leave it up to the readers to evaluate. If the publisher markets this new book properly, it will become a best seller among senior-citizen homeowners and their adult children. On my scale of one to 10, this superb book rates an off-the-chart 12.
“Reverse Mortgages for Dummies,” by Sarah Glendon Lyons and John E. Lucas (Wiley Publishing, Inc., Hoboken, N.J.), 2005, $16.99, 249 Pages; Available in stock or by special order at local bookstores, public libraries, and www.amazon.com.
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