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Reverse Mortgage Example as Counter to Inflation

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Now is a time when Reverse Mortgages really have the potential to shine by helping homeowners maintain control of their finances. With general living expenses up a few hundred dollars per month it’s become a real nuisance for everyone, but for someone living on Social Security it’s a haircut to their monthly cash-flow for living. There is nothing people can really do about the inflation because it’s very incremental and spread across everything we need and consume, so we have to pay for it. This is difficult for retirees living on a fixed income so here is how a Reverse Mortgage has the potential to make a significant difference. A real-life scenario would be one homeowner and a spouse living off of approximately $3,000 per month of combined Social Security income. Their inflationary increase in necessities that also include out of pocket expense for medicine would be approximately $400 per month. Many will also have a small mortgage or home equity line that they must pay in a timely manner to stay current with their home. In the past, before the inflation, a $1200-$1400 mortgage payment was manageable. Now, with this scenario they are still making the mortgage payment, but they are now forced to turn to debt such as credit card to supplement monthly absent residual savings which many simply do not have. This is not the optimal path as we all know but this is the path of least resistance, and everybody considers this first. The better option may be to remove the principal and interest portion of their monthly mortgage payment with a Reverse Mortgage and convert it into monthly cash-flow to support their current lifestyle.

Using our example, a couple making $3,000 per month that is paying $400 more due to inflation for necessities can now add back approximately $1000 per month toward living expenses using round numbers. That’s a 33% increase in cash-flow to counter the 10-15% increase in expenses. They key here is the couple maintains control and they are not forced to turn to risky expensive short term credit card debt to stay within their means. The situation could be much more dire for a single retiree living on half of this income.

These are realistic scenarios that are playing out everywhere with retirees. With every client I speak with, expenses are up across the board from last year.  Constructive choices can be made that include a Reverse Mortgage and we are here to help.

George H. Omilan
President-CEO – NMLS# 873983
Jefferson Mortgage Group LLC – Mortgage Specialist

Programs:  Traditional QM (Fannie Mae, Freddie Mac), government insured HECM Reverse Mortgages, and Non Traditional Non QM Mortgages commonly referred to as Specialized Forward Mortgages including “Alt-A Investor loans” and DSCR (Debt Service Coverage Ratio) loans up to 85% LTV, both Full doc and No Income-No Employment (No Doc) for the investor community. Our expanded niche products also focus on the more traditional FHA & VA with Lower Score and higher Debt-to-Income Options, Fixed & Variable Jumbo loans, and Private Label Reverse mortgages for higher priced homes. We are also highly focused on specialized loans for the Self-Employed borrowers with our Bank Statement & Asset Dissipation Programs. We are committed to offering a full range of “Non-QM Loans” for expanded qualification, where the banks and large-scale lenders dare to go.