Would you know anyone who has an aging parent or grandparent living in a small town far away from their kids and grand kids who would like to move closer but it is difficult to find a house for the same money, and they cannot afford to increase their monthly expenses? How about a parent or grandparent who has all their assets tied up in the equity of their home, but has other needs, maybe concerns about upcoming long-term care, or ongoing income over Social Security. Maybe you know someone who would bought and paid cash for a condo and the value dropped, maybe a lot of the condos sold to investors and are being rented, and moving is blocked by not having the money now to buy again after a loss. Or maybe you know someone who is doing well financially living in a big home someplace like Chicago, but the grand kids are here and they want to move close, but also want to have that vacation home they have always dreamed of, but cannot afford cash for both and don't want payments? Maybe it is you that has one of the needs above.
My in-laws were both the first and second questions above. We kept trying to figure out a way to help them move to Indy or Fishers but couldn't make the math work. This caused us to delay until other choices were out of the question, and we had to play catch up and choose between options after the best choices were already off the table each time. If someone would have shown us what I am about to tell you we would have built a statue of them on our front yard. It didn't exist then, but it is here to help all of those people now.
There is a project that I am working on that I believe will accomplish several things, help our agents create an ongoing new source of income, as well as several of our vendor partners, but most importantly greatly enhance and make some lives much more comfortable. This fits our company's Mission Statement of "Inspiring our Agents, Creating Opportunities for our Agents, Supporting their Dreams."
What I am speaking of is a HECM loan, or a Reverse Mortgage Purchase. I know I have just lost you, I am sure that you have heard all kinds of horror stories. However, if America was introduced to electricity by an electric chair no one would have it in their homes. The old Reverse mortgages had problems, as did annuities, heat pumps, and slab foundations, but things change and get better when they work out the bugs. Today's HECM is basically just an FHA loan, that at the end is sold and any equity in the house stays with the owner or their heirs, and if it is upside down it is a non-recourse loan where you simply walk away and nothing touches you.
You can purchase a home with a HECM depending upon your age, 62 is the minimum, and when a couple buys it is the youngest person that has to be 62 and that is the age it is amortized. CAUTION, if a couple wants to do this, ALWAYS have both people on the loan, that protects against one of the few downsides of this loan. If both people are on the loan, and one dies, the other can stay in the house as long as they live, are not in a nursing home for more than a year, or simply want to still live there. If only one is on it and they die, the other has no right to the house, only the equity balance if that is willed to them. The older you are the lower the down payment requirement. For purposes of this figure 50% down for the 62 year old, because that is the highest down payment.
Let's say that couple living in the small town sold their home and netted 60,000.00, they could move to the city where their family is and put down 50,000.00 on a 100,000.00 home, and use the 10,000.00 for moving expenses, maybe some new furniture. They would not have to qualify for a mortgage because they would never have a payment, they might need to prove income sufficient to pay the taxes and basic upkeep. They would never make a payment on the mortgage and the loan would start out at 50,000.00 and increase each month with the added unpaid interest. When they sell the house they would keep the balance of the equity.
How about our friends who need to access that cash for upcoming long-term care? My previous insurance agent, before I changed my policies to my son's company, when I taught him about this he used it with his mom. She was living in a condo that she loved, the payment was 1,500.00/mo which was difficult for her. She sold a small commercial property and had 70,000.00 which she put down on the condo paying about half of it. He then sold her a top of the line insurance policy with a strong long-term care rider that guaranteed her if she ever needed it full-time nursing on site so she would never have to leave the condo. Her monthly costs went from 1,500.00 to 300.00/mo with true peace of mind. Of if income was the issue, maybe she could have bought a guaranteed income annuity.
Even our well to do friends who sold their 500,000.00 house in Chicago and moved down to be near their grand kids and bought a 300,000.00 home in Indy with 150,000.00 down leaving 350,000.00 to pay cash for a home in Florida. As long as they keep the Indy house as primary residence they never have to make a payment.
We are putting something together with insurance, mortgage, REALTORS, financial planners, Senior Specialist attorneys to help guide people into the best opportunities for them. Again, this wasn't available when we needed it for my in-laws. If you have ever dealt with the financial issues that face so many seniors, you can be a tremendous blessing to them and their families with this, as well as create an outstanding additional business line for yourself.
As my wife Jodi, who is an evangelist on this topic having lived through it, says to anyone who crosses her path, "If you don't know what your parents financial situation is because you don't think it is any of your business, you better because it will be."
Be a Blessing to these families, keep in mind 10,000 people turn 65 every day.
