Despite celebrity spokespeople, if you choose a reverse mortgage, YOU NO LONGER OWN YOUR HOME in any functional sense. You can’t sell it, or pass it on to keep it in the family. You can’t even benefit from any market increases in value unless you pay back the entire amount PLUS interest and penalties.
You have to be at least 62 years-old to qualify for a reverse mortgage. Most Americans in their sixties still have a 20-year life expectancy. Starting that early, you are likely to outlive the value of the home. Most programs allow you to live in the house after the equity is gone, but they won’t provide funds to cover upkeep. You may live in the home for the rest of your life, but it could fall down around you.
Many seniors add adult children’s names to the property to avoid losing it to finance future nursing home care, but the amount of money available in a reverse mortgage money depends on the age of the youngest person, named on the deed. The older you are, the more money is available. So, if Mom is 80, Daughter is 62, the maximum amount is based on the daughter’s age. Once all of the homeowners pass on, or leave permanently (to live in another home, or a nursing facility,) anyone else who lives in the house has to buy it from the bank, or MOVE.
The government tries to protect seniors by requiring that they work with specially-trained counsellors before committing to a reverse mortgage. Unfortunately, these counsellors know only that particular program. They usually know nothing about eligibility for VA benefits, or local eldercare resources. Why risk your home, if you qualify for other programs to pay for your medicine? What if there are other options?
At a local women’s conference, my book-signing table was next to a lady with gorgeous hand-crafted purses. Women were giving her money almost faster than she could count it, and her booth soon emptied. She told me she was 63-yrs old, on disability from a back injury, and planned a reverse mortgage. WHOA!!! Based on the business she did at this one conference, I told her she needed a business plan and marketing strategy. I referred her to the business advice think-tank, Centerpoint at Governor’s State University. I also prayed that I’d been able to talk her out of risking her home when she could still generate significant revenue.
A reverse mortgage may be right for you if you are in your 80’s, or have no other options. If you are in your 60’s, you’re still a youngster. Consider generating income. Otherwise, contact your local Department on Aging, Area Agency on Aging, or the National Association of Professional Geriatric Care Managers (www.caremanager.org) for information about all of the senior support resources that might be available to you. The National Council on Aging (www.ncoa.com) has developed a software program, the Economic Check-up, that checks eligibility for many senior programs, including employment, food, health care, housing, income, medicine, and transportation. My goal is to have this software available to houses of worship, senior centers, and other places where seniors and their families congregate. Ask your local senior services program, organization of churches, or civic group to contact NCoA about a webinar.
Don’t risk your home, your family history, or generational property unless you have no other options.
NEXT THURSDAY: The Most Important Tip for how to AGE EXCELLENTLY! MANAGE YOUR STRESS.