Last night I had the privilege of speaking with a very nice couple, to whom I will refer as Mr. and Mrs. G. They obtained a reverse mortgage loan back in July of 2001. At the time, their home was appraised at $415,000, and the federal lending limit in their county was $239,250. The full amount of their benefit was just under $150,000.

Fast forward to today. They are now 80 and 79 years old, respectively. Their home is currently valued, conservatively, at over $650,000. The federal lending limit in their county is nearly $130,000 higher than it was when they got their original loan 6 and a half years ago.

The first question I asked them was simple. You’ve had the loan for nearly 7 years, how do you feel about reverse mortgages and how it’s fit into your life? They each expressed very positive comments about how it has helped them greatly. They simply have used the proceeds of the loan as a go-to for significant expenditures which inevitably come up in life. Home repairs, auto repairs, etc. After nearly 7 years of having their reverse mortgage, their balance is $83,000.

In our discussion last night, we looked at the fact that while their balance is $83,000, their home has appreciated in value approximately three times that much. They still have way more to leave their heirs now, nearly 7 full years after getting their reverse mortgage, than they did when they got it.

Mr. and Mrs. G stand to gain significantly with a refinance of their original reverse mortgage. They now have many options available to them which didn’t exist back in 2001. Among them is the fixed rate reverse mortgage. After paying off their current balance, a fixed rate Home Equity Conversion Mortgage, (HECM), will give them over $173,000 in tax-free cash. They also have the option to choose another adjustable rate HECM with a very low interest rate. This will give them in the neighborhood of over $220,000 after paying their current balance. And now, because of their home’s appreciation, they qualify for a jumbo reverse mortgage. This has a higher interest rate, but the lending limit is the value of their home, which in this case is about $300,000 higher than the HECM lending limit of $362,790. The jumbo loan, after paying their current balance, would net them well over $320,000.

Based on how they’ve utilized the funds from their original reverse mortgage, they may not need all of this money. But having it available to them whenever they need it provides them the peace of mind they need to live a financially stress-free life. Should the unforeseen happen, they are more than adequately equipped to face life’s financial challenges…while still being able to leave behind a very nice inheritance for their children.

This is a perfect example which refutes the baseless claims of critics who insist that obtaining a reverse mortgage will absolutely wipe out any hope of an inheritance, that you will exhaust your equity, and that it is the next “subprime” mess. Ask Mr. and Mrs. G. They love it, and they’re ready for more.