June 30, 2005 • ISSUE 22 / VOLUME 1

Financial Freedom's reverse mortgages

Free Seminar slated for July 9

If you're 62 years or older and own your own home, a Reverse Mortgage may be an option for you to have freedom from financial worries.

A reverse mortgage allows a borrower to tap into the equity of their home without having to pay a mortgage payment every month and without the risk of losing your home. There are no income qualifications and minimal credit qualifications.

Percy Ihara

Percy Ihara, Reverse Mortgage Specialist for Financial Freedom, the nation's largest and only direct lender and servicer of all three reverse mortgage loans, says, "With Hawaii's large senior population and high-home values, there isn't a better time than now to look into a reverse mortgage."

"Hawaii's senior's are literally sitting on a pile of money with the equity in their homes that they paid into all these years. And now, with a reverse mortgage, they have the opportunity to take it out.

"They can take it out in the form of monthly income, lump sum, line of credit for future use or in any combination they choose."

All income or proceeds from a reverse mortgage are tax-free and do not affect Social Security or Medicare benefits. Making an educated decision is very important to understanding how a reverse mortgage may benefit you.

People consider reverse mortgages for a wide variety of reasons – from paying for things they need or for things they have always wanted. As Ihara points out, "There are as many reasons why someone would want a reverse mortgage as there are seniors in Hawaii. One might consider a reverse mortgage when you have experienced your income reduced from a job layoff, loss of a spouse, rising medical costs, increased housing expenses, paying off an existing mortgage, fixing the home, buying a new car or helping a family member."

Reverse mortgages have been around since the early 1990s and common misunderstandings about this mortgage product still exist.

- Featured Advertisement -

The number-one misunderstanding is that the lender gets the house when they die. Ihara says, "I hear this just about everyday of the week and I tell people this no longer happens."

When a homeowner passes on or moves out permanently, then the heirs will refinance the mortgage balance and/or sell the home and keep all or the remaining equity.

Seniors are allowed to stay in the home for as long as they want, as long as they pay their property taxes and homeowners insurance.

Some homeowners worry that they may end up owing more than their home is worth. By law, you are protected from never owing more than the value of your home.

Another common concern of seniors is the safety of reverse mortgages.

A number of protection clauses have been put in place to make this a senior-friendly product. Today, all borrowers are required to receive mandatory counseling from a HUD or AARP approved-credit counselor. This is to protect the senior from being coerced or rushed into signing a loan application and to allow the senior to ask any questions they may have but didn't want to ask the loan officer. There are also interest-rate caps on all reverse mortgage products and the Federal Housing Authority guarantees all funds.

When all is said and done, there are really only two major questions that you should ask yourself. First of all, do you want to stay in your home that you love for the foreseeable future – a home where you may have raised your children or built an active community involvement around?

Second, if you had access to additional money, would you be able to improve your lifestyle and/or provide yourself with peace of mind?

If you can answer "yes" to both these questions, then a reverse mortgage may be well worth considering.

When you are ready to take the next step, meet with a reverse mortgage specialist to discuss your specific goals. After all, you'll want to make an educated decision about this popular product.

To answer your questions and address your concerns, Percy Ihara has scheduled another reverse mortgage seminar on Saturday, July 9, in Ala Moana Hotel's Pakalana Room, from 9 to 11 a.m. and 1 to 3 p.m.

Reservations are recommended, since the last seminar sold out in five days. Health-care experts social workers, legal and financial advisors should also be aware of this emerging product for seniors and are encouraged to attend.