It’s rather fitting to talk about financial independence on the day our beautiful country gained its independence. The Fourth of July has become synonymous with fireworks, parades, barbecues, family, friends and more, but we want to use this day to help senior homeowners find a way to achieve financial independence. In 1988 Ronald Reagan signed the bill that authorized the Department of Housing and Urban Development (HUD) to insure Reverse Mortgages through the Federal Housing Administration (FHA). So was born an amazing program to help senior homeowners live day to day independently without concerns of a limited fixed income.
Many of the seniors we talk to day in and day out feel trapped by their fixed incomes. Every expense, such as health care, gas, insurance and food among others seems to be on the rise, while retirement incomes remain flat. Pensions and savings are dwindling at an alarming rate. Social Security has not kept up with the cost of living and perhaps the death of a spouse or significant other has resulted in the loss of income. Financial independence seems unattainable to many.
A reverse mortgage is designed for homeowners age 62 and older to access the dormant equity in their homes. Proceeds can be taken in any manner chosen by the borrower. All liens against the property must be satisfied at the closing of a reverse mortgage. So, if the mortgage payment has become a burden, the reverse loan will pay it off, assuming the homeowner qualifies for enough to satisfy the lien. Once that mortgage is paid off, no monthly payments are required as long as the home is occupied as the primary residence. Taxes, insurance, HOA dues and any other fee associated with the property will need to be kept current, but imagine the relief of no more mortgage payments. That alone is enough to provide financial independence to many.
Many senior homeowners are finding that they are generating enough from their reverse mortgage proceeds to repair their homes, pay for medical expenses, pay off credit card debt and help family. The money has no restrictions on how it can be used. A reverse mortgage is a wonderful tool to help borrowers age in place, in the home they love and feel most comfortable in.
This independence day, while you are enjoying friends and family, take a moment to think how nice it would be for you or a loved one to live truly financially independent. A reverse mortgage may be just the missing ingredient to a well-rounded, holistic approach to retirement and financial independence.