I recently conducted a closing at a lovely townhome condominium. It was impeccably maintained and beautifully decorated. Looking around the home, I saw tremendous evidence of lives well lived. They had scores of family photos, souvenirs of vacations, etc. It was instantly apparent that the owners were proud of their home and their family. However, when I first uttered the phrase “reverse mortgage”, one of the owners immediately moved his index finger in front of his lips and shushed me.
In hushed tones, he indicated he didn’t want his neighbors to know he was obtaining a reverse mortgage. Within 30 seconds, the pride I sensed in the borrower had turned to shame.
Such emotion saddened me. The man has absolutely no reason to be ashamed or embarrassed. It is not his fault that our nation’s economy has fallen upon these hard times. It is not his fault it costs $70 to fill his car’s gas tank. It is not his fault that property taxes have risen dramatically, as our towns have to throw more and more money at under-performing school systems.
Instead, I think the couple’s decision to obtain a reverse mortgage should be applauded. They were able to get past the “stigma” of taking a reverse mortgage and instead were able to see it as a tool to maintain their lifestyle that they were so proud of.
Before I continue, I should be point out that I am 36 years old as a write this. I perhaps have a different perspective on life than today’s senior. I am just now starting my family; there is no shame in that for me. In years past, it was customary for men half my current age to be starting a family. But America has changed. For the better or worse, our country, and indeed our world, is not the same place as it was 40 years ago. It is “normal” in today’s day and age for a man to begin a family at 36. And it should be “normal” for a senior to choose to obtain a reverse mortgage without being embarrassed by it.
It has taken all of my 36 years to gain a true appreciation for everything my parents have done and continue to do for me. They spent half of their lives providing for me and another good portion of it caring for their parents. They are entitled to take advantage of any economic weapon at their disposal in order to best enjoy their later years in life.
Be not ashamed of a reverse mortgage. Like it or not, the four-letter word “debt” is now a key factor that permeates American life. But instead of using that four-letter word, I prefer “tool”. Whether it is being used to describe a reverse mortgage, a Student Loan or a traditional mortgage, borrowing money can be an economic tool.
So while a reverse mortgage can be an important tool, proper life planning should involve a few more tools in the tool belt.
And this is where the reverse mortgage professional can use relationships with professionals such as attorneys, accountants, financial planners, realtors and even home improvement specialists such as contractors to build their network.
These relationships can be two-way streets and help everybody involved, especially the senior.
I will now address each individually. 1. Attorneys: Clearly, every senior should consult with an attorney who specializes in estate planning. No matter the size of the estate, there are numerous ways an experienced attorney can offer valuable assistance. However, many seniors do not have a trusted attorney to turn to. In becoming a trusted advisor, a reverse mortgage professional can provide a credible referral to an attorney. Whether the senior could use a simple will, trust, health care proxy or durable power of attorney, it’s just another way the RMP can help. And in doing so, developing relationships with estate planning attorneys should prove to be fertile grounds for reverse mortgage candidates for the RMPs.
2. Accountants: For many Americans, personal accountants often take on the role of personal financial coach. However, overcoming the reverse “stigma” with accountants proves to be a significant obstacle. This is easily overcome by educating a few of the top local CPAs. With the common question, “Do I have to pay taxes on the money I take from a reverse mortgage?”, the referral stream should flow.
3. Financial Planners: I don’t think I can say anything about this category that hasn’t already been said. Keep in mind that you should prompt your financial planner network to educate their clients as early on as possible about the pros and cons of reverse mortgages. And you don’t need to be connected to every financial planner in town; focus on a few quality referrals sources and not quantity.
4. Realtors: In theory, a reverse mortgage is a Realtor’s nightmare. A realtor wants homes to turn over. They want seniors to “downsize”, as long as they get the listing. Educating Realtors as to the power of reverse mortgages in order to allow seniors to purchase a home would be music to their ears. The sales volume of realtors is actually readily available to date, so ask your local title company or real estate attorney for a list of top-producing targets.
5. Home Improvements Specialists: Let’s face it, maintaining a home and a yard as a senior ages becomes a substantial task. Whether it is a leaky roof, the need to install rails, a ramp in the home or simply the landscaping services that shovels or mows the lawn, home improvement specialists often play a key role in a senior’s life. In all likelihood, owners of businesses like these are less in demand as a reverse mortgage referral partner. Take advantage of this by educating a few of these professionals and see if it makes a difference.