Submitted by Neal S. Hutchinson; Reverse Mortgage Expert
Early in 2009, I had decided to change careers and based on my education and experience, several people had recommended that I explore the mortgage industry. I was talking to a couple of different mortgage brokers at the time and felt certain that this was a good path for me. At the same time, I was helping my Mom with her expenses. My father passed away a couple of years earlier and they were just getting by with both Social Security checks and a small investment in some stocks. After my father died, the social security income was basically cut in half, but her expenses didn’t change very much. She was starting to sell some stock to make ends meet, she would have to pay taxes from the sale and was also reducing her only other asset. I had started helping her with organizing, paying and trying to lower her bills. My brothers and I started giving her a little extra each month and we had explored several different options to make sure she could pay her basic expenses each month. If she continued to sell her stock, she would run out and then what would she do?
We decided to sell her house and buy a smaller one, investing the extra money left over to help. Even though she really didn’t want to move, she reluctantly put the house on the market and tried to sell the house. It was the wrong time to try to sell a big house. After lowering the price a couple of times, it became obvious that this plan would not work out very well. My Uncle called me and asked me if we had considered a reverse mortgage? I told him that I had looked into that a year or two earlier and she couldn’t get enough money from a reverse mortgage to make a significant difference. We talked about some numbers that he had discussed with someone and apparently some of the rules had changed over the last year or two. I needed to investigate this further.
My Uncle recommended an out of state company that he had spoken to and I called them. They were very nice, but made some assumptions about property values in our area that didn’t seem accurate to me and then mailed us an overnight box of paperwork. The next person I had been planning to call about a potential mortgage career was Jimbo King. It turns out that McGowin-King Mortgage had two departments – one for what I call Traditional Mortgages and the other specializes in Reverse Mortgages. In fact, I learned that Jimbo’s father, Jim King, has been doing reverse mortgages longer than anyone in the State of Alabama. They were definitely the local experts. We discussed the limits and rules for reverse mortgages that had changed significantly since I last looked at it and my Mom would be able to get a significant amount of money to help her. We studied the options and realized that this was a perfect option for her.
She gets to stay in her house for as long as she lives without the worry of any mortgage payment and she would receive a monthly check (not taxable!) that was enough for her to have a comfortable lifestyle and no more stress over which bills to pay next month. Next, I had to “sell” it to my sister and brothers. I had already spent a lot of time reviewing this and was sure it was our best plan. Getting their agreement would be easy, right? Wrong. Questions ranged from: “We’ll have to give the bank our house?” to “I don’t really know much about them, but Dave Ramsey once said they were bad, so I don’t think we should do it.” I had to educate them on the program. Now we all know the facts – she continues to own the house, her name stays on the title and she could sell the house or do anything she wants with it, just as before. Instead of a monthly mortgage PAYMENT, she receives a monthly CHECK from the mortgage company! She can spend the money on anything she needs or wants. Also, as with any loan, funds or proceeds received from a reverse mortgage loan are not taxed!
I saw first-hand how a Reverse Mortgage not only solved a financial problem, but it also removed the stress of worrying over her bills and this improved her quality of life. She now has enough monthly income to pay all her bills and still has her stock as a backup for emergencies; she still has her house and didn’t have to move.
Now I work for McGowin-King helping other seniors with Reverse Mortgages in Alabama. I personally find it very gratifying to help seniors during this time of great financial difficulty. The program we used with my Mom was one of several different types of Reverse Mortgages that fit her specific situation. There are other types for different situations and we try to fit the right program for each individual’s situation. A Reverse Mortgage is not necessarily for everyone, but I believe that if you are 62 or older, you should know more about them.
I am always happy to explain the Reverse Mortgage options with anyone to see if it is right for them. Please call me if you would like to learn more about a FHA-Insured Reverse Mortgage. My direct line is (205) 451-0678 and I will provide you with more information for your specific situation.
Neal originates mortgages for re-financing and buying houses, but specializes in Reverse Mortgages. He is married with three children and still lives only a couple of miles from his Mom.