Moving Forward in Reverse
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By a certain point in life, you’ve had enough time on this earth to question some past decisions. It seems as we mature in age and wisdom, we also evolve in discernment. Many of us would declare with confidence those things we’d do differently – apply those lessons learned – if only we were allowed such a chance. It’s a torturous mindset that not only robs a person of inner joy but consumes and takes captive their hearts and thoughts.
I was blessed enough to have been raised by my grandmother. And what stands out most – now more than ever – was her invaluable counsel and life’s teachings. She lived fully present and often advised me to do the same. She was of the opinion sang best by Al Stewart, “Well, I’m not the kind to live in the past. The years run too short and the days too fast.” I haven’t fully mastered her philosophy, but I’m surely on my way to getting there.
It is not only delightful to carve out time to reminisce with our elderly clients and loved ones, it’s in our best interest. The reveals from such conversations are both entertaining and awe-inspiring. Those seasoned in time can speak directly to the lives of us whippersnappers like no other. And if you’ve been blessed enough to experience it, you’ve stored up some intangibles in a very special treasure box. The wisdom pearls of a long existence are often tucked away within the errors and successes of those who’ve marched before us.
If Only...
In a recent College Grad article addressing a presented “Tough Interview Question – If you had to live your life over again, what one thing would you change?” readers are coached through the optimal responses to such a question. Personally, I would think the difficulty with this question isn’t necessarily whether you’d choose a life ‘do-over’ or not, but that you’re prompted to choose only “... one thing you would change.” I mean, who by mid-age hasn’t owned at least a handful of boo-boos? If you’re among the very few with no regrets, my humble hat’s off to you!
I’m guessing most of us have at least one major decision or two we’d consider worth a close second-round look. But if nothing else, we’ve learned that people’s regrets tend to reside within their testimonials of inactions rather than actions. There are countless studies and surveys on the topic of regret – and not surprisingly, among the most mentioned were those financially related. According to a MarketWatch finding, it turns out that most Americans face financial regret. And the greatest financial fumble was: “... not saving for retirement early enough.” It’s a regret that resonates among impending retirees as well as those fully retired.
The Harm in Hindsight
Remember the 2004 film Napoleon Dynamite? That ‘sleeper hit’ grossed a whopping $46 million. And while the opening scenes had me doing some head-scratching, it didn’t take long to see why so many found it difficult to look away. Among the eccentric cast, was train-wrecked Uncle Rico: a sad and washed-up, high school ex-football star who regrets the moment his life took a turn for the worst. He expressly recalled, if only “coach woulda put me in fourth quarter,” life would’ve most certainly turned out a famed and financial success.
Uncle Rico spent his entire adult life carrying the weight of total regret with an obsession and deep longing “to go back in time.” To right the wrongs of that final fourth quarter would be in his mind the gamechanger to his ill-fated course. Though his character might seem a bit overstated, the message speaks accurately to the real process of pain induced by regret – the sentiment comes through highly relatable.
While there’s a definite value in reflecting upon the past, too much time spent there can set a plunging emotive trajectory. None of us can go back and undo past decisions, but we can certainly make alternate, more informed ones moving forward. It is never too late to set a path toward a mid-to-late life course correction. This is true for many American Seniors who find themselves stuck lying in the lumpy beds they’ve figuratively made – all the while, unmindful to the pragmatic solutions proposed by a Reverse Mortgage – or even better, how it can provide rest from their strained financial circumstances.
Growing older doesn’t stop the dream wheels from turning. In fact, Golden-Agers as much as you or me, would fancy an ideal retirement if financial limits and hardships didn’t overshadow their former aspirations. Those things that took a back seat to prioritized cares became less essential – and before realized, the days turned into years, and the years into decades. All things considered, your senior clients’ financial futures shouldn’t be weighted or defined by their past mistakes.
Envisioning the Future with 20/20 Foresight
Recent years have shown the Reverse Mortgage gaining more consumer trust. Forbes reported Reverse as “An Excellent Hedge Against Property Value Risk – Especially Now.” Sounds like the kind of life jacket seniors just might like to try on. With borrowers beginning to see the value of eliminating monthly mortgage payments while enjoying equity access via open lines of credit that hold up quite well despite market fluctuations, it’s no wonder Reverse Mortgage transactions have significantly increased. Reverse Mortgage Daily reports “The Reverse Mortgage industry [is] on the cusp of another eventful year in 2021...” The recent traction provides for us a sneak peek into the program’s probable momentum – and what that means to 62+ year-old senior borrowers.
Since the destabilizing Covid-19 season took form in 2020, seniors quickly realized how limited their options had become. And with many vaguely aware of Reverse, a new opportunity arose for senior clients and their loan officers. In context with retirement and financial security, it might be a solid idea to adopt a ‘no senior left behind’ type of mentality.
Without a viable option to go back and physically alter or change retirement choices made ‘way back when,’ a more practical way may be possible with Reverse Mortgage. So in lieu of spending precious time-bound by financial constraints, wouldn’t it better instead if seniors could focus on what matters to them most: health, family, hobbies, personal goals and/or interests?
Reverse Mortgage 101
Features Worth Noting:
No Monthly Payments Required – Borrower Must Maintain Property Taxes, Insurance(s) and Upkeep
Adjustable OR Fixed Rate Options
An Increased Lending Limit of $822,375\
A Line of Credit Option with a Growth Feature built into it
HECM for Purchase Option – Buy a New Home with Reverse Program
Understanding the Basics
A HECM is Available to Borrowers Aged 62 and Older (One Spouse May be Younger)
Must be Primary Residence/Owner Occupied
The HECM is a Mortgage Insured and Guaranteed by the FHA – Due and Payable Upon Passing of (or Moving) Last Surviving Borrower or Qualified Non-Borrowing Spouse (NBS).
LTVs approximately 50% for 70-Year-Old – higher LTVs for older borrowers and lower for younger.
Once a borrower has passed-on or moved permanently, the Maturity Event triggers the loan into repayment:
In this case, the Non-Borrowing Spouse Rule would apply, which allows NBS to remain in the home, payment-free until he/she passes or moves permanently from property.
If no NBS Rule applies, the home is left to the estate (heirs) with the following options for loan repayment:
Sell the Home – Non-Recourse feature will allow heirs to sell the home without ever owing more than its worth.
Keep the Home – may potentially be purchased by the estate for 95% of property’s current appraised value (advanced loan proceeds, plus interest and other fees including MIP).
Refuse the Home - via Deed in Lieu
Once the borrower has passed on/moved out of the home and it has been reported to the Loan Servicer, the heirs will receive a “Due and Payable” letter within 30 days. Advisement: event should be reported to Servicer as soon as possible.
The estate will then have up to six months to satisfy the loan, with up to two 90-day extensions (subject to HUD approval) – allowing up to one year for the loan to be settled. Remaining in good communication with the Loan Servicer is key to achieving a positive resolution process and experience.
All About Options
Reverse Mortgage allows borrowers a second chance gift. So, whether tragedy-struck or lack of planning is to blame, the Reverse Program has options that may pave a way out. It’s all about moving forward for your clients – not looking backwards. And what Reverse proposes is a new opportunity that might seem for some, the next best thing to a do-over.
Reverse has traveled far and wide since its genesis. The loan set apart from the rest provides borrowers something no other product can. And with client awareness building, Loan Officers are discovering the value in adding Reverse to their offerings. Imagine the scores of retirees you can help....
Hindsight has us recognizing regretful moments after they’d presented and passed. But this is INDEED one of those moments you’ll either reflect on with pride or grief. How will you choose? You have senior clients open now to the idea of Reverse – or at the very least – ready to learn more about it. Our HECM Team is standing by, fully equipped with all you need to jump right into this exciting future-building venture. We invite you to a great partnership, where together we can forge success and change lives. A wonderful opportunity awaits, PRMG Family, and you surely don’t want to miss it. You may be considering whether your business has room for the Reverse Program – and it’s a fair enough question. But with interest rates recently on the rise, isn’t there no better time than now? Take advantage of this unique opportunity to partner with our team and keep your earnings moving forward. Either way you choose, be sure to bear in mind: “You may delay, but time will not.” – Benjamin Franklin
To learn more about Reverse Mortgage, reach out to HECM411@prmg.net.
