What about this option?

It’s an enchanting summer evening on the patio, you’re joined by guests, and Sophie says, “I’mgoing to do a reverse mortgage,” and eyes quickly begin darting around the table.

The reverse mortgage is the most misunderstood financial mortgage product on the market. It is designed for a borrower that is 62 years of age or older and gives the borrower access to a percentage of the equity in the home. The borrower defers payment of the loan until he or she dies, sells, or moves out of the home.

The industry did it to itself back in the early ‘60s with selfish decisions and an eye for profits over ethics. In 1983, the Senate approved a proposal by Senator John Heinz to have reverse mortgages insured by the Federal Housing Administration (FHA), the insurance arm of the U.S. Housing and Urban Development Department, and in 1987 an insurance bill, the Home Equity Conversion Mortgage, was passed. In trying to protect senior citizens, as legislation so often does, it ended up lowering the “principal limits” or the loan amounts that could be accessed from the senior’s home equity. Many of the seniorswho apply today and would have qualified for the program prior to Oct. 2, 2017, are now not able to take advantage of the higher lending limits.

With today’s changing demographics — 10,000 to 11,000 baby boomers turning 65 daily, employer pensions almost non-existent, government programs in flux, decreasing savings plans, and people living longer lives— retirement has become a worldwide crisis, and out of reach for many. A few of the world’s leading economists see the reverse mortgage as an answer to this ever-growing problem.

Fast forward to today— HUDhas continued to make changes to the program for the protection of our seniors. Over the coming months we’ll explore how the reverse mortgage works, when it’s an appropriate solution, and when you need to look at other alternatives. Reverse-mortgage clients are required to live in and maintain the property, pay taxes, insurance, and any HOA dues. But if you qualify, you will not make principal and interest payments for the rest of your life, if you so choose, and that will surely make you smile!

Dirk Gray is a reverse-mortgage specialist with FrostMortgage and an accredited instructor for the New Mexico Real Estate Commission. He can be reached at 505-9301953 or dirk_gray@frostmortgage.com.