As the population of our country ages and the demand for senior-friendly housing increases, are you ready for the challenge? Communities catering to the "active adult" are springing up everywhere as these retirees who want housing that meets their lifestyle and needs are looking to perhaps make a move. But what about the senior who wants to stay in the home in which they have made a lifetime of memories?
For the senior who wants to remain in that home but might need to supplement their income or have a particular financial goal in mind, there is another option. And that option is one little known insider secret that savvy real estate professionals across the country are embracing in record numbers. It's the reverse mortgage.
A reverse mortgage?
Isn't that for seniors who want to stay in their homes? As a real estate professional why do I need to even think about this product? The answer may surprise you. There are a few very creative ways to build your business and enhance your position in the industry as specialist in working with the senior market using the reverse mortgage as a financing tool.
As the baby boomers (those born between 1946 and 1964) approach retirement age, they are having a real impact on the real estate market and the economy in general. Companies are implementing strategies geared to capturing the attention of the baby boomers. How can you position yourself to serve their real estate needs as this next generation of seniors makes their home buying and selling decisions? And just how could the reverse mortgage fit into this picture?
Let's consider for a minute the definition of a reverse mortgage. It is a loan product that enables people age 62 and over who own a home to take a percentage of the equity out of their home without having to sell the home, move, or take on a new mortgage payment. Some of the more common uses for reverse mortgage proceeds include supplementing one's income, paying for expensive medications, paying off a mortgage, basically uses that would be considered "needs", as opposed to "wants".
As the reverse mortgage gains popularity (record numbers of reverse mortgages have been originated in recent years) the uses for the proceeds have become more and more creative and these proceeds are being used to meet the "wants". Increasing numbers of seniors are using reverse mortgages to fund travel, gifts to children and grandchildren, and charitable giving. But there is one more use that will be of particular interest to real estate agents.
What if a senior could use reverse mortgage proceeds to purchase another home?
Yes, indeed, the proceeds can be used for virtually any purpose, so why not help your senior clients meet their real estate goals by utilizing the reverse mortgage? Let's say you have a senior couple whose dream it has been to own a vacation property that all of their children and grandchildren could enjoy together. They have been struggling to figure out how they can afford it. The savings they have available are not enough for a cash purchase and they are hesitant to take out a "forward" mortgage for fear of the monthly payment.
You, their trusted real estate professional, suggest a way to access tax-free funds in the form of a reverse mortgage and suddenly their dream has become reality. You have satisfied their goal and increased their real estate holdings in the form of a vacation home that they have yearned for. You have just set yourself apart as a true professional and you did it by educating yourself on a specialized product that can meet the needs of millions of seniors in our country today.
How about another example...a senior who lives alone. The children are concerned about mom or dad in that big old house that requires a lot of maintenance and is so far away. The finally convince mom or dad that it is best to move to a secure, gated condominium community. However, as you are reviewing different available condos, the price seems to be prohibitive. The proceeds from the sale of the older home just aren't going to be enough to buy the new unit. A forward mortgage is not a consideration, because mom or dad is on a fixed income and taking on a new mortgage payment is just not part of the picture.
You, once again, in the role of trusted advisor, suggest that the client look into a "reverse for purchase". You haven't heard of that before? I'm not surprised. A reverse for purchase is probably one of the best-kept secrets I've ever seen. Personally, I make sure all of the real estate professionals I work with know about this concept and even better, they know how to make it work.
By educating yourself on all options available to your senior clients you will be assured that you are providing the best advice and guidance possible and you will have truly positioned yourself as an expert. These clients are looking to you to step into the role of an advisor and help them sift through the many decisions that have to be made. Embrace that role and take advantage of the impact that the baby boomers are sure to bring to the real estate market.
About the Author: Sue Haviland is a Certified Senior Advisor and nationally recognized reverse mortgage expert. She truly has a passion for the reverse mortgage program and educates both real estate professionals and loan officers across the country on the benefits of reverse mortgages. Contact Sue at www.reversemortgagesuccess.com or by email at email@example.com for further information on reverse mortgages or to schedule a presentation for your company.
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