I got a call from a recent client of mine. He was a bit disappointed that the appraisal on his home came in about $30,000 less than he expected. He is now re-considering whether or not he should get a reverse mortgage at this time.
While I totally understand the punch to the midsection that is the reality of the housing market these days, it’s a good idea to get the air back in your lungs before you react. This gentleman can really use a reverse mortgage. There’s no question. He will still get back quite a bit of needed money. However, what he thought he would get is not realistic right now.
I don’t know about you, but the biggest regrets in my life are not the decisions I made, but the ones I didn’t make. The opportunities which came and went without me on board. As John F. Kennedy once pointed, out, when written in Chinese, the word “crisis” is made of two characters. One represents danger, the other represents opportunity.
Opportunities, like crises, come when they come. They don’t always come when we want them to. Perhaps he should have gotten a reverse mortgage 3 years ago. Perhaps he should get one 3 years from now. The question is, can he afford to wait not just for the home values to reverse and trend upward, but for it to get to where he wants it to be? That may take several years.
For him, he needs the money now. When the home values eventually turn around and grow again, it will likely do so at a slower pace than we’ve enjoyed in the past. When it does, he can always refinance and capitalize on the recovery. But the fact is, his home value is as high right now as it’s going to be for some time. It’s going to go down further before it recovers and gets back to where it is now, and even longer before it gets back to where he thinks it ought to be.
While I don’t believe in pressuring people when considering a reverse mortgage, I do think that if you’re not able to wait 2, 3, 4 or even 5 years, now may be the time to act.
Opportunities typically don’t knock for long. I’d hate to see him painted into a financial corner in which his options change, and force him to move from the home he loves. The unmade decision can cause a lifetime of regret.