Are You A Good Candidate For A Reverse Mortgage?

Discover if you are a good candidate for a reverse mortgage loan. Our blog post covers the eligibility requirements, benefits and drawbacks of this financial product to help you make an informed decision.
Happy senior couple shaking hands with insurance agent after successful agreement on a meeting in the office.

In his book “Understanding Reverse”, reverse mortgage industry trainer and Certified Reverse mortgage Professional Dan Hultquist breaks reverse mortgage borrowers into three overlapping categories:

  1. Those who have an immediate need.
  2. People who want to enhance their lifestyle.
  3. Those who use a reverse mortgage as part of their overall financial plan.

****I highly recommend that you purchase a copy of Dan’s very informative book at: https://understandingreverse.com/

In this article, I want to break these categories down for you and give you examples of each category.  However, before I do that, I want to explain what a reverse mortgage is and just a bit about how it works.  

What is a reverse mortgage?

Most reverse mortgages are insured by the Federal Housing Administration (FHA) so that is the program I will be focusing on for this article.  The name of the FHA insured reverse mortgage program is the Home Equity Conversion Mortgage (HECM).

The HECM is specifically designed for people age 62 and older that allows them to convert a portion of the value of their primary residence into spendable cash without required monthly principal and interest payments.  Since the home stays in the name of the homeowners, they are still required to pay their property taxes and homeowners insurance, as well as maintain the home, live there as their primary residence and keep their names on title.  

As long as these requirements are met, they never have to make a monthly payment and can never be forced out of the home.  The  loan only comes due when the last homeowner, or non-borrowing spouse, permanently leaves the home. 

Please do not think of this as free money.  We all know there is no such thing as something for nothing.  The homeowners are charged interest on the money they use.  However, since no monthly payment is required, the interest that is being charged is added to the loan balance.  This is a negatively amortized loan meaning that the loan balance increases over time instead of decreases.

It is very important that the homeowners understand this concept and I spend considerable time making sure my customers do understand.  

Now, let’s discuss some of the reasons people get a reverse mortgage.

1. People who use a reverse mortgage for an immediate need.

An immediate need is something the homeowner needs now.  This could be as simple as paying off an existing mortgage on the home because they were forced to retire earlier than expected.  It could also be an important home repair or paying for medical needs.  

Quite often, people in this situation are referred to as house rich and cash poor.  In many cases a reverse mortgage can help them in these situations.  This is what a lot of people think of when they hear the term “reverse mortgage”.  But it doesn’t always have to be this way.

2. People who want to enhance their lifestyle.

As mentioned earlier, the HECM does not require a monthly principal and interest payment so getting one can dramatically improve cash flow if it is used to pay off an existing mortgage or other debt.

If this is combined with a line of credit (LOC) that is available when the homeowners need it for travel, to help family, upgrades to the home of even a new vehicle, it can dramatically increase the quality of life for the homeowners.

Another way a reverse mortgage can help with cash flow and lifestyle is by receiving the funds from the HECM as a monthly payment.  This can be set up as a “tenure” payment, meaning the payments will continue for as long as the homeowner occupies the home and abides by the program guidelines.   The homeowners may also choose to receive the monthly payments over a fixed “term”.  

A reverse mortgage for purchase can help people get into the perfect retirement home and still not have a monthly principal and interest payment. 

3. Using a reverse mortgage as part of a financial plan.

Probably the best way to use a reverse mortgage is to structure it as part of the overall financial plan.  It helps to do this with the assistance of a financial advisor.  

A lot of people enter retirement with a disproportionate amount of their wealth as equity in their home.  Structing a financial plan to access a portion of the equity (tax free) makes sense.  If the home is owned free and clear, people will sometimes set up a line of credit to have available when other investments are down in value and they need to use it.  Using the LOC in this instance instead of cashing in a depreciated asset could be a wise move.  

Others have used a term payment to delay taking Social Security until age 70 so they can maximize the amount.  This is beneficial if someone needs to retire early but still needs cash flow.  

Another great way to use the LOC is as a cash reserve.  With this option, the homeowners can have 100% of their retirement portfolio working for them because they do not have to leave a percentage as a cash buffer.  

Are you a good candidate for a reverse mortgage?

A lot of people do not even consider a reverse mortgage because they believe the old notion that reverse mortgages are only for desperate people.  As you can see from the examples here, this is clearly not the case.

The first question you need to ask yourself is what are you hoping a reverse mortgage will accomplish for you.  Then you need to make sure you understand the pros and cons of a reverse mortgage to gauge if the benefits outweigh the costs or if it is the other way around.  

With over twenty years of helping people answer these questions, I would be glad to help you through the process of deciding if you are a good candidate or not.  

Please feel free to contact me with any questions.

Bruce E. Simmons, CRMP, CLTC
NMLS #409914
Reverse Mortgage Manager
American Liberty Mortgage, Inc.
NMLS #1462
1932 W 33rd Ave
Denver, Co 80211
Office:  (303) 458-3778
Direct:  (303) 467-7821
Cell:  (303) 513-2748
Web-site:  www.reversemortgageradio.net

Bruce Simmons

Bruce Simmons

I absolutely love what I do - working with senior homeowners to help them live a more comfortable, flexible and secure retirement. I have the absolute best customers in the world, and even though I worked in the forward mortgage business for a number of years, I could never go back to doing conventional loans. I'm a 100% reverse mortgage specialist.

5.0

My wife and I are retired and had a mortgage that was quite high. We contacted Bruce regarding a Reverse Mortgage and were pleased with his knowledge and experience. He made the whole process very easy and explained everything along the way. Since then, I have had a couple of questions and contacted him regarding the RM. Bruce has always been very responsive and returned our calls within minutes. We couldn't be happier having used Bruce for the Reverse Mortgage and highly recommend him.

Bruce has been serving my interest over and above what one might expect during the whole process of handling my reverse mortgage dating back to 2010 and continues to be available at present whenever a question may arise. He is one of the most reliable, trustworthy and knowledgeable experts regarding reverse mortgages that I have had the privilege to do business with! I would highly recommend Bruce to anyone who is considering a reverse mortgage. Thank you Bruce!

I met Bruce from a referral who just love what he did for them on their Reverse Mortgage, So I contacted Bruce and told him my story and he came up with a great Reverse Mortgage for me and my needs and now I am living good and not worrying about Finances anymore. He had it done in a timely manner. If you are looking for the MAN to help you get the best Reverse Mortgage you need to call him and hope you let him help you.

Bruce is one of the most professional, knowledgeable and efficient experts I have worked ŵith ever in any field. He is fast to answer and always ready to help...and he's a great guy!

Gerald Cook
Gerald Cook
5.0

Bruce did our original reverse mortgage and has also refinanced it twice. He works hard to get the best deal possible while making it as easy for us as possible. When our first refinance received a low initial appraisal, Bruce helped the appraiser find better information and increase the appraised value. He's the best.

I was hesitate about getting a reverse mortgage until Bruce Simons put my mind at rest. He is easy to work with, extremely knowledgeable and efficient. Things get done and he will make sure that you understand every part of the process. I interviewed several other people and he was hands down.....The only choice.

Doing a Reverse Mortgage is a major decision, when working with Bruce he came out personally to go over every thing in detail, there was no pressure to finalize the transaction, I had even put the loan on hold for awhile even though I had locked in my rate, I had called Bruce off and on for a few weeks to ask questions that I had concerns about and he was always available to talk to me. In the end it gave me time to feel comfortable about my decision to move forward with the Reverse. Bruce was very pleasant to work with and would certainly recommend Bruce if you are going to consider a Reverse Mortgage.

Bruce Simmons at American Liberty is one of the best in the reverse mortgage industry. I have known and worked with him for years and he always does a great job. You are in good hands with Bruce and know that he will take good care of you or your loved ones every step of the way.

Best thing I ever did! Bruce Simmons at American Liberty Mortgage is the best. He is always there to answer your questions, and can easily explain the whole idea of a Reverse Mortgage. He takes the time and goes through the entire process with you. It worked out so well for me. Thank You Bruce!

We had researched Reverse Mortgages for 5 years and after hearing about Bruce Simmons and meeting with him, we finally decided to move forward with the Reverse Morgage. It has been over a year now and we are still very pleased with our decision. We think Bruce is very professional, knowledgeable and honest. Thank you, Bruce, for all your help.

I first met Bruce Simmons 2017. I found him on the internet. I was looking for someone local. I called him and explained I was only looking into doing a reverse mortgage, so I did not want him to think this was something I was ready to do. Bruce was friendly, very open about the basics of a reverse mortgage. Bruce came to my home and presented the figures and other details that he could offer. The first thing that impressed me was this was not a hard sell, more of a informational meeting. He was very open about all of the details, and answered my questions without hesitation. What really was evident was he was establishing a relationship with me, and I realized he knew I would not take the loan at that time. There was not enough equity in my home, and I would have to bring money to the table. Although I was not ready to do a loan, Bruce assured me he is always available for questions. Four years later, I finally did do a reverse mortgage, and I couldn't be happier with having done it. I have done away with a mortgage payment which allows me to fund my retirement account with that mortgage payment. We did some much needed landscaping with our cash out transaction, and will move on to improvements inside of the house. My reverse mortgage has a line of credit, and I feel sense security knowing it is there if I need it. Bruce explained that a reverse mortgage is not for everyone, but I feel certain that he paved the way for a strategy that worked for me. I will definitely do a refinance when the time is right. I will check in with Bruce to be sure what the benefits are when I do it again.

I have worked with Bruce Simmons for 15 years. Bruce is one of the best in the industry. He is extremely knowledgeable, kinds and detailed in what he does. His clients love working with him and trust him to help them with their Reverse Mortgage loans. I would recommend Bruce to anyone I know that is thinking about or wanting to do a Reverse Mortgage. He will always take very good care of the customers and make sure their needs are met! Class act and one of the best in the industry by far!

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This 28-page Consumer Guide will help you make and informed decision whether a reverse mortgage is right for you.

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John Addante
John Addante

Left us a 5 star review

My wife and I are retired and had a mortgage that was quite high. We contacted Bruce regarding a Reverse Mortgage and were pleased with his knowledge and experience. He made the whole process very easy and explained everything along the way. Since then, I have had a couple of questions and contacted him regarding the RM. Bruce has always been very responsive and returned our calls within minutes. We couldn't be happier having used Bruce for the Reverse Mortgage and highly recommend him.

Bruce has been serving my interest over and above what one might expect during the whole process of handling my reverse mortgage dating back to 2010 and continues to be available at present whenever a question may arise. He is one of the most reliable, trustworthy and knowledgeable experts regarding reverse mortgages that I have had the privilege to do business with! I would highly recommend Bruce to anyone who is considering a reverse mortgage. Thank you Bruce!

I met Bruce from a referral who just love what he did for them on their Reverse Mortgage, So I contacted Bruce and told him my story and he came up with a great Reverse Mortgage for me and my needs and now I am living good and not worrying about Finances anymore. He had it done in a timely manner. If you are looking for the MAN to help you get the best Reverse Mortgage you need to call him and hope you let him help you.

Bruce is one of the most professional, knowledgeable and efficient experts I have worked ŵith ever in any field. He is fast to answer and always ready to help...and he's a great guy!

I was hesitate about getting a reverse mortgage until Bruce Simons put my mind at rest. He is easy to work with, extremely knowledgeable and efficient. Things get done and he will make sure that you understand every part of the process. I interviewed several other people and he was hands down.....The only choice.

Doing a Reverse Mortgage is a major decision, when working with Bruce he came out personally to go over every thing in detail, there was no pressure to finalize the transaction, I had even put the loan on hold for awhile even though I had locked in my rate, I had called Bruce off and on for a few weeks to ask questions that I had concerns about and he was always available to talk to me. In the end it gave me time to feel comfortable about my decision to move forward with the Reverse. Bruce was very pleasant to work with and would certainly recommend Bruce if you are going to consider a Reverse Mortgage.

Bruce Simmons at American Liberty is one of the best in the reverse mortgage industry. I have known and worked with him for years and he always does a great job. You are in good hands with Bruce and know that he will take good care of you or your loved ones every step of the way.

Best thing I ever did! Bruce Simmons at American Liberty Mortgage is the best. He is always there to answer your questions, and can easily explain the whole idea of a Reverse Mortgage. He takes the time and goes through the entire process with you. It worked out so well for me. Thank You Bruce!

We had researched Reverse Mortgages for 5 years and after hearing about Bruce Simmons and meeting with him, we finally decided to move forward with the Reverse Morgage. It has been over a year now and we are still very pleased with our decision. We think Bruce is very professional, knowledgeable and honest. Thank you, Bruce, for all your help.

I first met Bruce Simmons 2017. I found him on the internet. I was looking for someone local. I called him and explained I was only looking into doing a reverse mortgage, so I did not want him to think this was something I was ready to do. Bruce was friendly, very open about the basics of a reverse mortgage. Bruce came to my home and presented the figures and other details that he could offer. The first thing that impressed me was this was not a hard sell, more of a informational meeting. He was very open about all of the details, and answered my questions without hesitation. What really was evident was he was establishing a relationship with me, and I realized he knew I would not take the loan at that time. There was not enough equity in my home, and I would have to bring money to the table. Although I was not ready to do a loan, Bruce assured me he is always available for questions. Four years later, I finally did do a reverse mortgage, and I couldn't be happier with having done it. I have done away with a mortgage payment which allows me to fund my retirement account with that mortgage payment. We did some much needed landscaping with our cash out transaction, and will move on to improvements inside of the house. My reverse mortgage has a line of credit, and I feel sense security knowing it is there if I need it. Bruce explained that a reverse mortgage is not for everyone, but I feel certain that he paved the way for a strategy that worked for me. I will definitely do a refinance when the time is right. I will check in with Bruce to be sure what the benefits are when I do it again.

I have worked with Bruce Simmons for 15 years. Bruce is one of the best in the industry. He is extremely knowledgeable, kinds and detailed in what he does. His clients love working with him and trust him to help them with their Reverse Mortgage loans. I would recommend Bruce to anyone I know that is thinking about or wanting to do a Reverse Mortgage. He will always take very good care of the customers and make sure their needs are met! Class act and one of the best in the industry by far!