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Every week I see seniors who are falling behind the eight ball for various heart breaking reasons. Many of these seniors should not be losing their homes or near losing their homes. I met a 68 year old man a few weeks ago who lost his beloved wife to cancer. She had been suffering for over seven years and passed away in February. The man told me that the cancer cost him over $30,000 per year out of pocket because the insurance didn't cover all the costs - he had paid over $200,000 dollars in medical bills by refinancing his home while she was sick over the years and his house is currently only worth around $220,000.
His local bank referred him to me for a reverse refinance. My heart went out to him because he did the honorable thing to try pay bills while caregiving for his wife. To add to the pain, he lost her social security of $1,200 dollars per month after she died and now has a mortgage payment and expenses he cannot afford.
I wish I had met him a few years ago before he refinanced the house and incurred a mortgage payment he cannot make. A few years ago, when the house was free and clear, he could have refinanced with a reverse mortgage and could have received a line of credit to pay bills - and now would have no mortgage payment. He did not know about the loan then; and now, I can't help him because he lacks the equity. All he can do is to try for a loan modification and rent out a room in his home and hope the market comes back in a few years to acquire more equity.
This wonderful man and I talked about other options going into his future. He told me that government jobs were coming to his area and government workers would be buying homes. I told him once his home appreciates and he could pull out $60,000, he could sell his home and purchase a new home with the new Home Equity Conversion Mortgage Reverse for Purchase loan. This is a loan that Congress passed in February 2009 to help seniors afford homes with no monthly payments - Income and credit are not important.
The way the loan works is, if he puts down $60,000 as a down payment, the lender/FHA would lend him a matching loan/contribution of approximately $75,000. (Depending on his age, down payment and the purchase price). Then, he would be able to purchase a condo that he is looking at out of state for $135,000 and have no monthly payment until he dies, sells, or moves. He would have title to the property and could not be forced to move even if he stripped the equity and his home went backwards in value. The FHA Reverse for Purchase has many safe guidelines in place for seniors.
I believe this genuine man will pull out of his predicament because he is a survivor. But, I become upset when I realize how his life could have been a little easier if he had been advised sooner about loans for seniors. More education is needed so elderly people can make decisions that alleviate their financial burdens. It's enough grief and hardship to lose a loved one - but the added financial burden can leave the vulnerable widow or widower to the mercy of the banks. I know this because I also lost a spouse to cancer and was left with debt.
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