It commences with receiving AARP brochures in the mail, continues by discussing Medicare benefits, and sadly includes the inability to read your own watch. The aging process as I'm learning very quickly is something none of us are immune too. And while I've yet to find a way to prevent it from occurring there are many steps which our society has been trained to take in order to ensure that these golden years of our lives our actually golden.
The problem is the steps we took back in our most productive years don't seem to be getting the job done these days. IRA's are depleted, home values are deflated, and our investment portfolios are depressed.
Americans, both wealthy and less fortunate have searched long and hard for a 21st century tool that can enable them to constitute a safety net for the rainy days to come, to secure their homes and lifestyle, or even garner disposable income to invest in their futures. Since 2006 over half a million scrupulous Americans have realized immense benefit from the FHA insured, Reverse Mortgage product. And why do over 80% of all Americans with a reserve mortgage proclaim that they would recommend the product to a friend?
Because it works.
Americans over 62 years of age with equity in their homes are not only eliminating their monthly mortgage payments if they have one, but scores of individuals are benefiting from hundreds of thousands of dollars of cash. It's a perfect scenario for any retired individual on a fixed income, and even better for an experienced investor who values cash in an economy where "cash is king."
And no, you do not give up ownership of your home, there are no stringent income or credit qualifications, the bank can never kick you out of your home, the fees can be less than normal financing, you can still leave your home to your surviving family members, and a reverse mortgage is not a loan of last resort. Instead, it is a viable, responsible, and extremely lucrative retirement strategy.
But how does it work?
Countless educated Americans have simply shunned the Reverse Mortgage product because it seems like something just too good to be true. But in reality it's a simple yet dynamic product. The FHA insurance protects the borrower against any bank default, while simultaneously insuring the bank that at the maturation of the loan the entire loan amount will be paid off whether or not the home value covers it. Thus, banks see this as a guaranteed investment and have your best interest in mind, as their benefit increases the longer you live in your home due to accruing interest.
We are currently in a significant metamorphosis of America's mindset toward the reverse mortgage. Due to improvements in regulations, credentials, and historically low interest rates, the reverse mortgage has never been a more secure financial instrument. Over the next few years we will see the reverse mortgage evolve into a vital part of the fabric of the American retirement, and when sitting at the dinner table with our nation's most seasoned citizens the question will not be if, but who they trusted their reverse mortgage to.
Mehran Aram is the President and CEO of The Aramco Group founded in 1998. He is a graduate from the University of San Diego School of Business in 1984 and has recently been honored with the distinction of CRMP (Certified Reverse Mortgage Professional), a certification held by less than 10 brokers statewide. For years Aram and his competent staff have helped San Diegans purchase and sell their homes, refinance their loans, and secure their retirements with a reverse mortgage, and remains the premier real estate finance expert in San Diego.