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Avoiding the obvious, sometimes it works, sometimes NOT!

February 29, 2012

A reverse mortgage can eliminate credit card debt and provide additional income.

Just when I thought I couldn’t find anything to blog about, my phone rings and another interesting meeting takes place.

I originally was given Ellen’s contact information from her Jackson Hewitt tax professional. This was a man who had done her taxes for many years and was also a trusted personal friend. Knowing Ellen’s finances and the road they were going down, Rob suggested she give me a call. At the time, Ellen had extreme losses in her stock accounts, limited income, a home paid for and rising credit card debt. Rob thought she could benefit greatly from a reverse mortgage.

I first met Rob when I spoke about the HECM (Home Equity Conversion Mortgage) also known as a reverse mortgage, to a local Tampabay organization. After the presentation Rob asked if we could meet so he could get the pros and cons, complete details and take a look at the amortization schedule of a typical reverse mortgage. Rob knew many St. Petersburg seniors who could benefit from the proceeds, Ellen was one of them. Three years ago Ellen and I spoke but she failed to face what was happening with her finances.

This week Ellen realizes that her life would have been better over the past three years had she taken the step when we first spoke. Ellen has $20,000 in credit card debt, she keeps transferring balances to avoid the interest, she is 79 years old, she is short $300 per month just to meet her obligations and next week she is starting a part-time job. Good for Ellen, she managed to find a job in a high unemployment market. Instead of traveling with her friends, attending her senior group meetings and crocheting, Ellen is going to work. Not quite the life she was expecting in her golden years.

Had Ellen done a reverse mortgage three years ago she undoubtedly would have received more funds as her home would have appraised higher. The balance in a line of credit would have been growing, thus providing more funds over time. Ellen would not have $20,000 in credit card debt!

One of the most difficult tasks of my job is to present a picture of what may happen in the future. Will I sound like a “used car salesman”? Will the client remain in denial? Will the client realize the benefits? Will the Ellen’s avoid the obvious? Or . . . will my next Ellen realize she can enjoy her retirement years, with the assistance of a government insured reverse mortgage. Sometimes I leap that hurdle, sometimes I can’t reach those that need it the most.

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