This could be a life savior

Many people have retired from their busy working live, and finally can live lives they deserve. However, many of them have run into an awkward situation. They might be house rich yet cash poor.

For example, a long time small town resident that I helped with, he was in his 80s, carried a small mortgage on his home, but there were also several liens against his house. These liens incurred at time when He had taken out loans to make some unexpected repairs on this house, or to pay for medical bills. ?All these junior liens carried high interest rates, so he ended up spending large portion of this retirement pension and social security check on these payments every single month. ?Since he was really struggling to make all these payments, and he would be late on payments from time to time, he always had this fear that one of his lien holders would come in and foreclose his home, and he would end up being a homeless somehow. ?I provided him with a reserve mortgage which paid off all the liens, plus got him $50,000 cash at closing. Best of all, going forward, he has no monthly mortgage payment to make. It made a huge difference in his life: now he finally can enjoy his life not constantly worrying about how would make the payments. He even plans to take a trip that he has put it off for so many years.

?I also helped another client of mine, who is a widow and owns a large home, and her children all have left home, so now she lived alone.?The home was way too large for her to maintain, and she wished to move into a small two-bedroom town home (she prefers not to go to a retirement home). However, there was the dilemma:?she was not working, lived on social security only, so she was afraid that she couldn’t qualify for a mortgage. Another challenge was that she was also house rich, cash poor, she couldn’t come up with the down payment even she could qualify for a loan to make the purchase. ?Of course, she could sell her home first and use the proceed to purchase a small home with all cash. But she would have no place to live for several months not even sure that she would find a place in that short period of time to her like. Worse, she would not know what to do with her belongings while she is without a home. ?So, she just kept brushing this idea aside until she was referred to me by another client of mine.?Again, I provide her with a reserve mortgage on her large home. With the loan proceed, she had the luxury of taking her time to look and not being stressed out. She finally found a townhome that met her meets. Best of all, she now had ample of time to move herself into the new home, and decide what to do with all of her belongings. ?She just recently sold her large home and paid off the reserve mortgage. Now, she is as happy as she can be, lives the life she wanted.

?It is a myth that many people believe that with a reserve mortgage, the bank would own the home. Nothing could be further from the truth: reserve mortgage is no different than a conventional loan that banks would just put a trust deed on the borrower’s home. Yes, the mortgage grows larger each year because payments were not made, but as long as the borrower lives in her home, the mortgage will to be due.?The mortgage only due when she moves into an assistant living care home/nursing home or she passes away. After her death, who is taking over her home??Her children do. They would have about 12 months to decide to inherit home and refinance out of the reserve mortgage or just simply sell it to pay off the bank.

?Reverse mortgage is not right for every elder. Each person’s situation is different. That is why it is crucial that if you are thinking about getting a reverse mortgage, speak to qualified mortgage broker first. You also should contact a HUD(Department of Housing and Uban Development) approved agency for a consultation before starting the process. Equipped with the information, you also should discuss with your family to make sure everybody is on same page that would ensure the whole process goes as smooth as it can be.?