Reverse mortgage for home improvements

Seniors who are above the age of 62 can access reverse mortgages from many lending institutions, thanks to the American Homeownership and Economic Opportunity Act, the National Housing Act and other pieces of legislation that allow or facilitate reverse mortgage security instruments in the United States. 

These will generally have a spirit behind them including enabling the elders to retain their “pre 62” living conditions, improve living standards, sustain healthcare, pay off current mortgage, pay off debt, purchase a new car, travel, pay for college tuition, stop a foreclosure, reduce overdependence on their children and any specific or miscellaneous home repair and maintenance.

Practical example

A couple looking to basically purchase their security later on life can use the equity in their home to borrow from banks and improve it for even greater home equity.  Carl, 77 of Arizona says “we wanted long-term care, and to be able to afford that, why not use some of the equity in the house to purchase it?”

Carl and his wife have a line of credit tied to their reverse mortgage facility.  For the two years that they have had the account, they have used the reverse mortgage proceeds for more than insurance payments.  They have built a classic swimming pool for their use, cultivated an extensive garden and generally upgraded their house and home conditions.  The wife, Elizabeth says “all this has been catered for, with no stress attached at all”.

It is such kinds of expenses that reverse mortgages are intended to address in the improvement of homes or for their total makeovers.  However, the extents of renovations and improvements that can be supported by the reverse mortgages are not unlimited.  In fact, as Carl’s wife observed, “your line of credit as a reverse mortgagor will really determine how much you can perform within and without your home”.

What are the repairs and improvements to be made with your reverse mortgage?

It is the case that most people have, once they receive the reverse mortgage money, gone on a spending spree.  They may buy recreational vehicles, rebuild their existing homes or even buy new ones.  These are major investments that will usually require one to have tremendous home equity in order to acquire comfortable lending. 

For those who do not have the financial muscle to handle such sprees, it will be advisable to adhere to the basic but often bypassed logic, spend only on that which is necessary.

Glenn Petherick, a Director of Communications for the National Reverse Mortgage Lenders Association (NRMLA) says “one of the most popular (uses) is those who need a little extra income, maybe for living expenses or home repairs or improvements”.  Petherwick says people have used the money to make their homes more accessible by adding ramps or turning downstairs dens into bedrooms.

Technical assistance

For Petherwick’s advice not to fall through, any intending repair by a reverse mortgagor may need to the services of qualified personnel.  Those will undertake the task in a cost efficient, and proper manner.

After all is said and done, the use of such reverse mortgage money as advanced by the lender is at the discretion of the borrower.  Judge wisely.

References

• http://www.books/google.co.ke - Complete Idiots Guide To Long-term Care Planning
• http://www.gofso.com – Reverse Mortgages and How They Can Enhance Your Retirement
• http://www.ftc.gov/bcp - Federal Trade Commission on Reverse Mortgages and Consumers.