The Senior Cash-Flow Crisis Solution… Reverse Mortgage Benefits

greg-santIssue 17.10

Approximately 417 people reach retirement age each hour, and most of these retirees expect to have the same or a higher standard of living when they leave the work place.  A person’s standard of living is based on their fixed income.  Because of this, a person’s standard of living fluctuates with their cash-flow.  Unfortunately, most seniors do not have the monthly cash-flow to support the standard of living they want.  This shortfall every month forces them to just “get by” and do without some basic needs.  One solution to help with this cash-flow crisis is to use the equity in their home to supplement their monthly cash-flow.

Housing represents approximately 20% of a household’s wealth across all income groups.   A study was conducted by the Center for Retirement Research (Boston College 2010) that showed the benefit of using the home equity as part of a retirement plan.  The simplest way to access this equity is by using an FHA insured Reverse Mortgage or HECM (Home Equity Conversion Mortgage).  The study concluded that the use of a Reverse Mortgage (HECM) to supplement a senior’s cash-flow position will raise their standard of living by 10% or more.

At the age of 70, Joan was a widow and struggling with her monthly cash-flow.  Her income from pensions, social security and other retirement funds had dwindled and she was unable to maintain her standard of living.  She also longed to visit her children and grand children that lived in England but did not have the resources to pay for the trip.  By securing a Reverse Mortgage, she received a cash payment at closing that allowed her to travel to England to see her family.  She also had enough equity to receive a monthly payment each month that eased her cash-flow crunch.  The Reverse Mortgage was able to give her access to 60% of the value of her home while allowing her to keep ownership with no monthly mortgage payment.

Reverse Mortgages help thousands of seniors every year to keep their homes, use their equity to solve their cash-flow problems, and improve their standard of living.  Because there are no credit or income requirements to qualify for a Reverse Mortgage, even a senior in severe financial distress can obtain one.  All FHA insured Reverse Mortgages (HECM) allow the homeowner to stay in their home for the rest of their life, and when they have permanently left the residence, the home can be passed on to their heirs.  The heirs are given up to 12 months to sell or refinance the home and payoff the Reverse Mortgage.  All remaining equity in the home is the property of the heirs.  If the home value does not cover the balance due on the Reverse Mortgage, then the lender uses the FHA insurance to cover their losses and the heirs have no obligation to make up the difference.To learn more contact Greg Sant at Bank of America Home Loans at 435-773-0357 or  You can also visit his website at



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