• Debbie Nace

Why My Mother Got a Reverse Mortgage

My mom got her HECM reverse mortgage before I got into the business. I wasn’t even aware of her plan, so it was a bit of a surprise when she and her husband called to get my opinion about the idea.


“Honey, you're the real estate expert in the family and you know about mortgages,” she said. “What do you think about these reverse mortgages?”


I explained that I’d been responsible for processing closings on reverse mortgages for a few years and thought they were a great financial tool.


“Well, we're thinking we need to do one,” said mom.




Both my mom and her husband had lost their spouses a few years prior, so this was a second marriage for both of them. They had both sold their homes in Orange County, CA and moved into a beautiful home on the lake in Temecula, CA, which they purchased with cash.


Unfortunately, they didn’t do quite the due diligence they should have and were hit with some unexpected repairs after closing. For one thing, the place turned out to be completely infested with termites. My husband jokes that the only reason the house was still standing was because the termites were holding hands. You could literally put your ear against the wall and hear them crunching away. It was terrible! Adding insult to injury, they also discovered a roof leak in the family room.


Unfortunately, all those repairs ended up going on to credit cards. My stepdad didn’t want to have a mortgage, so he financed the repairs with zero interest credit card offers that would periodically come in the mail. They would pay down the card as much as possible until the zero interest introductory period ran out, then transfer the balance to another zero interest credit card.


The credit card juggling worked for a while, but it eventually became very stressful and frustrating. This wasn’t the retirement lifestyle on the lake my mom had envisioned. The reverse mortgage seemed like an ideal solution because it could eliminate the credit card headache once and for all and free up cash that could be used for more enjoyable things.


An Ideal Solution


A HECM reverse mortgage is a type of home loan designed to give seniors 62 years of age or older access to a large portion of their home value without having to give up ownership of the home or take on a monthly mortgage payment.


As long as the required property charges (property taxes, homeowners insurance, HOA dues, etc.) are paid on time, no monthly payments are required and the proceeds don’t have to be paid back as long as at least one borrower is permanently living in the home.

The HECM reverse mortgage turned out to be an ideal solution because they were able to tap into their home equity to completely clear the credit card debt and eliminate the financial stress and headaches it had caused. They were able to completely pay off the debt, retain title ownership of their home, and they weren’t stuck with a monthly mortgage payment to boot.


They initially qualified for a total pool of cash worth $160,000 and used $80,000 of it right away to clear the credit cards. This resulted in a huge monthly savings! Even if their minimum payments were just 2% of the total $80,000 combined balances, that meant they were able to eliminate around $1,600 worth of monthly expenses!


The remaining $80,000 they qualified for was left in a line of credit that would be available for future use. The great thing about the line of credit is that it grows larger automatically over time, giving my mom and her husband access to even more money in the future.

They’ve only had to tap into the credit line twice since they got their reverse mortgage, and it’s now grown to over $100,000. They preferred not to have to tap into the line of credit, but it was ideal that they had it, because it made it possible to install a stair lift and make some additional roof repairs. They also enclosed the deck with a beautiful sun porch.


My great aunt always used to say that when her ship comes in, she’s going to travel and do fun things. My mom says the reverse mortgage was her ship. It came in and made it possible to not be burdened with huge credit card payments anymore. She and her husband were able to reduce their expenses so much that they were able to build up a nice travel fund and to enjoy her life. I love seeing my mom have a great retirement. 


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Borrower must occupy home as primary residence and remain current on property taxes, homeowner's insurance, the costs of home maintenance, and any HOA fees.

Mutual of Omaha Mortgage, Inc., NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Alabama Consumer Credit License 22123; Alaska Broker/Lender License AK1025894.  Arizona Mortgage Banker License 0926603; Arkansas Combination Mortgage Banker/Broker/Servicer License 109250; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, License 4131356; Loans made or arranged pursuant to a California Finance Lender Law license, 60DBO93110; Colorado Mortgage Registration 1025894; Connecticut Mortgage Lender License ML-1025894; Delaware Lender License 028515; District of Columbia Mortgage Dual Authority License MLB1025894; Florida Mortgage Lender Servicer License MLD1827; Georgia Mortgage Lender License/Registration 46648; Hawaii Mortgage Loan Originator Company License HI-1025894; Idaho Mortgage Broker/Lender License MBL-2081025894; Illinois Residential Mortgage Licensee MB.6761115; Indiana-DFI Mortgage Lending License 43321; Iowa Mortgage Banker License 2019-0119; Kansas Mortgage Company License MC.0025612; Kentucky Mortgage Company License MC707287; Maine Supervised Lender License 1025894; Maryland Mortgage Lender License 21678; Massachusetts Mortgage Broker and Lender License MC1025894; Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022452; Minnesota Residential Mortgage Originator Exemption MN-OX-1025894; Mississippi Mortgage Lender 1025894; Missouri Mortgage Company License 19-2472; Montana Mortgage Broker and Lender License 1025894; Nebraska Mortgage Banker License 1025894; Nevada Exempt Company Registration 4830. Licensed by the New Hampshire Banking Department, Mortgage Banker License 19926-MB; Licensed by the New Jersey Banking and Insurance Department.  New Jersey Residential Mortgage Lender License 1025894; New Mexico Mortgage Loan Company License 1025894; North Carolina Mortgage Lender License L-186305; North Dakota Money Broker License MB103387; Ohio Residential Mortgage Lending Act Certificate of Registration RM.804535.000; Oklahoma Mortgage Lender License ML012498; Oregon Mortgage Lending License ML- 5208; Pennsylvania Mortgage Lender License 72932; Rhode Island Lender License 20163229LL. Rhode Island Loan Broker License 20163230LB; South Carolina BFI Mortgage Lender/Servicer License MLS-1025894; South Dakota Mortgage Lender License ML.05253; Tennessee Mortgage License 190182; Texas Mortgage Banker Registration 1025894; Utah Mortgage Entity License 8928021; Vermont Lender License 6891; Virginia Mortgage Broker and Lender License, NMLS ID #1025894 (www.nmlsconsumeraccess.org); Washington Consumer Loan Company License CL-1025894; Wisconsin Mortgage Banker License 1025894BA; Wyoming Mortgage Lender/Broker License 3488.  (866) 200-3210.  Subject to Credit Approval.  

Charges such as an origination fee, mortgage insurance premiums, closing costs and/or servicing fees may be assessed and will be added to the loan balance.  As long as you comply with the terms of the loan, you retain title until you sell or transfer the property, and, therefore, you are responsible for paying property taxes, insurance and maintenance.  Failing to pay these amounts may cause the loan to become immediately due and/or subject the property to a tax lien, other encumbrance or foreclosure.  The loan balance grows over time, and interest is added to that balance. Interest on a reverse mortgage is not deductible from your income tax until you repay all or part of the interest on the loan.  Although the loan is non-recourse, at the maturity of the loan, the lender will have a claim against your property and you or your heirs may need to sell the property in order to repay the loan, or use other assets to repay the loan in order to retain the property.

These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. For licensing information, go to:www.nmlsconsumeraccess.org

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© 2018 by Debbie Nance.