Often misunderstood, reverse mortgage provides income for borrowers during retirement.
For seniors who are “house-rich” but “cash-poor,” reverse mortgage can be a great financial product in their retirement plan, according to Dru Bocek who has been a dedicated reverse mortgage consultant since 2006.
“Now, we have more reverse options to consider,” she said. “When I first started there was just A or B, and we used A most of the time. But everybody’s different. It’s not one size fits all. You may need to borrow the most money that’s available to you in order to pay down other debt, or you may simply want the peace of mind that comes from having money available to enjoy a more comfortable life. You can even purchase a home using reverse mortgage. There are certain situations where it makes total sense.”
When it comes to weighing the pros and cons of different options based on your unique situation, Bocek, who works closely with a team of reverse mortgage specialists at Security One Lending, emphasizes the importance of understanding all the facts when it comes to making a reverse mortgage choice.
“Most importantly, you want to make sure you’re making the best choice for your situation,” she explained. “Whether you want to stay in your home for just a few more years or the foreseeable future, it’s important to find the best deal overall. Some reverse mortgage options provide maximum borrowing capacity, while others offer lower up-front costs. Either way, the older you are the more money you get, so I even suggest to some clients that it might better to wait.”
For example, with 10,000 baby boomers turning 62 years of age every day, the option of a Home Equity Conversion Mortgage (HECM) can help increase their purchasing power and flexibility when right-sizing to a smaller, lower maintenance home, making a move closer to family or friends or taking advantage of the carefree lifestyle of a senior housing community by lowering their cost of living during retirement.
“The HECM for Purchase is a Federal Housing Administration (FHA) insured home loan that allows seniors to use the equity from the sale of a previous residence to buy their next primary home in one transaction,” Bocek explained. “Regardless of how long you live in the home or what happens to your home’s value, you only make one, initial investment (down payment) towards the purchase – you can eliminate monthly mortgage payments and preserve your cash.”
While there are many different scenarios where reverse mortgage can be a great option, there are a few where it is not recommended. That’s why it’s so important to work with an experienced professional.
“Reverses mortgage is all we do at Security One,” Bocek said. “It’s our specialty, and the people I work with genuinely appreciate that. They also like the fact that as their lender, we are the ones who will be servicing their loan. We don’t hand it off to anyone else. We’re here to help anytime you have questions or concerns.”
Druanne M. Bocek, NMLA ID 525408
Reverse Mortgage Consultant
Security One Lending
Security One Lending, NMLS 98161
IN-DFI First Lien Mortgage Lending License #11269