The History of the Reverse Mortgage in Colorado, Part 1
In 1987, Congress commissioned HUD (FHA) to write the Reverse Mortgage Program. A year and a half later the program was ready to roll and Congress approved 2,500 loans as a pilot program, with each state getting 50 loans. One lender per state was selected to administer the pilot program and our Senior Solutions of Colorado colleague, Paulette Wisch, was chosen by her firm to be Colorado’s representative.
Some twenty years later, having transacted thousands of reverse mortgages, Paulette remains our region’s number one expert. Here is the first part of her interview. If you have questions about reverse mortgages, call her at Universal Lending, 303.759-7354
Q: What is a reverse mortgage?
A: A reverse mortgage converts a part of the equity in the home into money. A calculation is done based on age (must be at least 62), value of the home, and an interest rate. It is a loan against the equity in the home that does not have to be paid back as long as the homeowner lives in the property.
Q: Whom do they best suit?
A: The loan is suited for any senior homeowner who is looking for more financial security. We have done loans on houses valued at anywhere from $24,000 to $1,750,000. Some clients want monthly income to help with cash flow. Some want to payoff credit cards or dental bills, others want to help their grandchildren with college expenses, buy a new car, or purchase a second home so they can be “snow birds.” The one requirement is that we pay off all existing debt on the home. The rest of the money can be used for whatever the client needs or wants.
Q: What questions do you ask to determine if a reverse mortgage is a sound strategy?
A: I ask clients what they are trying to accomplish. I ask about age, value of home, debt on the home. I don’t care about bad credit, since the house is the collateral for the loan. In general, I first make sure they qualify and then show them the various programs. I try to get the kids involved, but some seniors say, it is none of their business and that’s fine, too.
Q: Why are they such a good idea for the right person?
A: The financial security they provide. We all want options in our life but to have options you need money – the reverse mortgage is the perfect vehicle. I got a call today from a client I helped in 1991; he said the reverse mortgage has been a Godsend and that he never could have afforded his lifestyle without the program. He is soon to be 92 and still living in his home. That is what it is all about.