The Risks of Indecision and Inaction

As difficult as some decisions may be, putting them off may effectively eliminate your best options and leave only one course of action.  Quite often that default option never would have been the first choice.  It was simply the one that required the least effort.  To quote Peter Drucker,

“One has to make a decision when a condition is likely to degenerate if nothing is done…

The effective decision-maker compares effort and risk of action to risk of inaction”

We have recently had several instances of people who could have truly benefited from a Reverse Mortgage, but they waited too long.  For some it is fear, for others it is lack of knowledge, and for others, it seemed too daunting a task.  We are here to help you, your loved ones or your clients navigate the Reverse Mortgage process, starting with education, so their decision can be an informed one.  Maybe a Reverse Mortgage is right for them, maybe it isn’t.  You won’t know until you ask your questions, we ask our questions and we see not only your current situation but understand what your goals are.

Many people do not understand the versatility of Reverse Mortgages – that they can be tailored to suit the needs of the borrower.  People just assume “One of those won’t work for me”, without stopping to take the time to investigate.  Here are some scenarios where we might have been able to help but now are unable to:

After filing for bankruptcy, a couple came to us for a Reverse Mortgage.  They would need $20,000 in cash to pay down their current mortgage enough to qualify for the Reverse Mortgage.  Unfortunately, they didn’t have it.  Had they come to us sooner, when they still had some savings, they might have been able to avoid the bankruptcy and qualify for the Reverse Mortgage.

A self-employed couple called about a Reverse Mortgage.  Their business had been declining for many years due to market changes.  Unfortunately, by the time they reached out to us, their situation had deteriorated to a point where a Reverse Mortgage could not solve the problem.

A couple with past financial troubles applied for a Reverse Mortgage.  Unfortunately, there was a second mortgage on their home from when they had difficulties.  Had there only been a first mortgage, we could have helped.  Now they will either need to figure out a way to pay the second mortgage or wait until their equity increases to a level where they qualify for the Reverse Mortgage.

A 66-year-old woman lost her job about seven months ago.  It was a good job that paid well.  She did not want to start drawing Social Security until she was 70 in order to maximize her benefits.  She wanted a Reverse Mortgage, but had no documentable income.  We recommended that she get a job, even it pays less than the last job.  By remaining unemployed, she runs a risk of creating too large an employment gap which will then require her to have two years of employment before she can qualify for a loan.

Because Reverse Mortgages are underwritten based on income, assets and credit, it is possible for someone’s financial situation to deteriorate to such a point that a Reverse Mortgage is not possible.  Many people view Reverse Mortgages as a last resort when instead, they should be considering the Reverse Mortgage first – before filing bankruptcy, taking out a second mortgage or selling in hopes of finding cheaper housing.

The most ideal time to get a Reverse Mortgage is when you are convinced you don’t need one –

when your health is strong, money isn’t an issue and you see nothing but blue skies ahead.  

Then, when the storms come, you are prepared.  While you are dealing with a sudden health crisis, unexpected home repair or other family emergency is not the most opportune time to start filling out loan paperwork.  It can be done, but it just compounds the stress.

Please let us know how we can help.  We are happy to answer your questions and run various scenarios with you to help you through your decision-making process.  Even if a Reverse Mortgage isn’t the course of action you determine to be best for you, at least make that decision with all of the available information.