Robert Ready, a reverse mortgage specialist, walked him through the process. The first step in this process is finding out what the goals for utilizing a reverse mortgage are. Offsetting expenses encountered when one spouse has a catastrophic illness is a very common situation. It is also very stressful due to the fact that the healthy spouse is facing many difficult decisions.

Once Mr. Jones had all of his questions answered about the reverse mortgage and how it would impact both himself and his wife, the decision was made to move forward. The Jones live in Montgomery County Maryland. The FHA Home Equity Reverse Mortgage (HECM) lent the Jones approximately $242,000.

Mr. Jones used the funds available to pay for the remaining three months of rehabilitation his wife required. He used $60,000 to make modifications to the home including widening doorways, installing ramps, a chairlift and lowering counters. He is also using some of the proceeds to pay for In Home Health Care to help with the continuing care of his wife. The remaining funds not being used are in a line of credit, growing for them and available for their use as needed.

She and her husband had lived in several places along the East Coast and had taken their four children on numerous vacations across the country, so she imagined she would spend her retirement the same way. The couple talked about driving from their home in Fredrick, Md. to somewhere along the West Coast, where they dreamed of relaxing on the beach and sticking their feet in the Pacific Ocean. They planned to stop to do some sightseeing at many attractions across the country, including Yosemite Park and the Grand Canyon.

“But then he passed away, and I thought ‘There goes my dream,’” she recalled. “I knew I’d never have enough money to do it alone.”

Because the 61-year-old grandmother was not yet eligible to receive social security benefits, she struggled to live on a very limited income and often found herself staying home to conserve money. But then, tucked inside her monthly bank statement from M & T Bank, she read a brochure that turned her luck around.

Dorothy had received information about the bank’s reverse mortgage program, through which the equity she had accumulated by owning her home would be paid out to her before it was ever sold. Knowing that she couldn’t stand being isolated in her home for much longer, she contacted Barbara Hillard, a reverse mortgage specialist with M & T Bank. She was ecstatic when she found out the benefits she’d be receiving.

“It came at the perfect time and it was so simple,” Dorothy said. “All I did was meet with Barbara and think about how I was going to spend my money.”

Though she knew she wanted to pursue her dream of the motor home, Dorothy seriously considered the effect that the reverse mortgage would have on her children. She wanted to leave them with a sense of security, and found she would still be able to accomplish that in the present and in the future.

“The value of my home is still going up as we speak, so my children will be left with that inheritance when I eventually do sell it,” Dorothy said. “But even better, I can help them out financially now if the need ever arises, and I can watch them enjoy the money today instead of waiting 20 years.”

On her 62nd birthday, the date that marks her official eligibility for a reverse mortgage, the process of receiving the money and purchasing her new motor home will finally begin. Her son-in-law helped her find a used motor home in great condition, and once the transaction is complete Dorothy will pick it up right away. She is planning a trip to Florida with her grandchildren this spring.

“When I found out about the reverse mortgage from M & T and saw the motor home for sale, I knew my late husband was guiding me every step of the way,” she said. “My dream is picking back up now.”

Both retired public school teachers, the Taylors raised two kids of their own and put them both through college, all the while saving adequately for their retirement. Their annual income consists of their pension from the county school system, social security benefits, and income from other investments such as their retirement plans.

While they lived a comfortable retirement lifestyle, their dream of owning a vacation home was not something they thought they could afford. Mr. and Mrs. Taylor heard about the reverse mortgage program and decided to investigate further. They contacted Robert Ready of East West Mortgage Company, which deals primarily in reverse mortgages. After meeting with him, their life-style dramatically changed.

The Taylors decided to use the proceeds from their reverse mortgage to help purchase their dream vacation home in Ocean Pines, MD near Ocean City, MD. They received approximately $175,000 from the reverse mortgage on their primary residence and combined it with an additional $50,000 in savings to make the vacation home purchase. With a reverse mortgage, they managed to achieve a primary residence in Anne Arundel County with no payments for as long as they own their own home. Plus, they now have a vacation home for which they paid in full with cash.

Having made this purchase several years ago, the Taylors have seen the value of their vacation home appreciate dramatically. They’re happy and their children and grandchildren are delighted to have a family vacation retreat. The Taylors are just one of many couples and individuals using the reverse mortgage program to supplement their income for unique reasons.

*Eligibility*
There are several criteria that must be met before a consumer is eligible for a reverse mortgage. Potential borrowers must be 62 years of age or older and live in their own home. Borrowers must also own their homes outright or have significant equity in their homes. Individuals with remaining balances on a first or second mortgage may be eligible for a reverse mortgage, but those mortgages will have to be paid off with the proceeds from the loan first. Single-family homes, manufactured homes, condominiums, and townhomes are all eligible properties.

There are no income, credit, or employment requirements to qualify for a reverse mortgage. The amount a borrower receives is dependent on age, interest rates, and the overall value of their home. Older borrowers will generally receive more than younger borrowers and home values are a major factor in determining the payout amount of the loan.

Borrowers are required to meet with a reverse mortgage counselor before obtaining a loan. Counselors are independent professionals who provide education about the mortgages and can suggest other alternatives. For a list of counseling agencies approved by the U.S. Department of Housing and Urban Development, visit www.hud.gov or call (800) 569-4287.

*Payment Options*
Once a borrower has obtained a reverse mortgage, there are several payment options available to them. A lump sum payment gives borrowers the total amount of the loan in a single payment. Fixed monthly payments allow loan recipients to receive payments for a set time period varying from several months to up to life. A line of credit lets borrowers utilize funds from the loan at any time. According to the National Reverse Mortgage Lenders Association (NRMLA), “The most popular [payment] option-chosen by more than 60 percent of borrowers-is the line of credit.” The flexibility provided by a line of credit is the primary reason for its popularity.

*Using the Funds*
The proceeds from a reverse mortgage can generally be used in any way that the borrower desires. Borrowers frequently use the money to fund home repairs or modifications that will make aging in place easier and more comfortable. They may also opt to use the proceeds from the loan to cover rising health care or prescription drug costs. Obtaining money to pay off property tax bills and existing debts are also reasons that borrowers cite for seeking a reverse mortgage. Other consumers are looking for additional funds to enhance their lifestyles. This type of borrower may use the funds from a reverse mortgage to take vacations or purchase luxury items.

*Paying Back the Loan*
A reverse mortgage is due only when the last remaining borrower moves from the home, dies, or sells the home. Loans are repaid through the sale of the home. Therefore, the amount a borrower owes can never exceed the value of their home. Reverse mortgages have no affect on other assets and any debt associated with the loan cannot pass on to the borrower’s estate. Also, the NRMLA points out that if a home is sold and “the sales proceeds exceed the amount owed on the reverse mortgage, the excess money goes to . . . [the] estate.”

*Popularity of Reverse Mortgages*
Reverse Mortgages have grown dramatically in popularity in recent years. The escalating cost of living, combined with the desire of seniors to remain in their own homes for as long as possible, has led to an unprecedented increase in the amount of loans. The NRMLA notes that in 2004 “lenders originated a record 37,829 HECM loans . . . a 109 percent increase over the 18,079 loans closed the previous year.” NRMLA credits this tremendous growth to increased understanding of the consumer protection features that are inherent in reverse mortgages. Such features included standard and capped interest rates, independent counseling, no prepayment penalty, and asset protection, among others.

In the past, reverse mortgages have been misunderstood and have faced many misconceptions. As more seniors receive accurate information, the loans continue to grow in popularity. Reverse mortgages are not the financial solution to every problem, and they are certainly not right for everyone. However, for seniors who wish to remain in their own homes for as long as possible, they are an important option that should be considered.

For more information, visit the National Reverse Mortgage Lenders Association’s (NRMLA) website at www.reversemortgage.org or the U.S. Department of Housing and Urban Development’s website at www.hud.gov.

*Quick Facts about Reverse Mortgages:*

Types: Home Equity Conversion Mortgage (HECM) – This federally-insured private loan program is administered by the Department of Housing and Urban Development (HUD). Like all reverse mortgages, this loan requires that the borrower be 62 years of age or older and own their home or have significant equity in their home. Loan applicants must currently live in the home. Additionally, individuals must complete free mortgage counseling from HUD-approved counseling sources.

Single-purpose reverse mortgages-Provide borrowers with smaller loan amounts to pay for express costs. These mortgages are generally offered by state or local government agencies for a specific reason. Often these loans are used to pay for repairs or home modifications, allowing seniors to remain in their homes. They also may be offered to help pay property taxes. They are not available in all areas; check with your local Office on Aging about loan availability.

Proprietary reverse mortgages-Generally the type of loan individuals are referring to when they mention reverse mortgages. These reverse mortgages are not federally insured and are offered by banks, mortgage companies, and other private lenders. Mortgages are backed by the companies that develop them. Although proprietary reverse mortgages are generally more expensive than the other types, there are no restrictions on how the money can be used. Loan advances are generally available to quickly provide borrowers with much needed funds.

*General Features of all Reverse Mortgages:*
Social Security and Medicare benefits are generally not affected by reverse mortgages. Seniors should consult with a benefits advisor in order to ensure that there will be no change in their benefit status.
Homeowners retain the title to their homes until they die, permanently move from the home, sell the home, or reach the end of their loan period. This is beneficial for seniors because a move is considered permanent only after 12 consecutive months out of the home. Seniors could therefore live in an assisted living or nursing facility for recovery or rehabilitation and return to their homes without affecting their loan.
Reverse mortgages are rising-debt loans. The interest is added to the principal loan balance each month. Therefore, the amount that the loan recipient owes increases significantly with time.
At the end of a reverse mortgage term or when the homeowner dies or moves, there will be little or no equity left in the home. There are fewer assets for the homeowner and his or her heirs.
Lenders can determine which fees will be charged and the rates for those fees. Fees include origination fees, closing costs, and servicing fees.
Interest on reverse mortgages is not deductible on income tax returns until the loan is paid off in part or whole.
Homeowners are still responsible for taxes, insurance, utilities, maintenance, and other housing expenses.

Information adapted from the Federal Trade Commission’s consumer article, “Reverse Mortgages: Proceed with Care.”

For more information, please visit this helpful website: http://www.homeownersinsurance.org/additional-resources/how-reverse-mortgages-work/.

Alan and Katharine Jung are truly a model for ideal retirement living. Not only have their retirement living decisions been well thought-out and proactive, but they have also embraced the new opportunities that retirement offers and are fully enjoying what they refer to as a “new season in their life.” The couple can certainly offer helpful advice to others concerning retirement living decisions-right down to the downsizing checklist Katharine devised.

They did just that during a recent presentation for their fellow residents and prospective residents at Carroll Lutheran Village, a continuing care retirement community in Westminster, MD. Their presentation was part of a program about retirement living decisions, which included various senior -serving professionals.

Putting themselves in a position to fully enjoy their senior years has always been on the agenda for these two planners. As Alan relates, “We were kind of in a unique situation in that we always knew that our home-office combination would be the cornerstone of our retirement financially. We always had the mindset in place that is necessary to leave your home. Too many people are tied to their homes, but we really weren’t. We had plenty of time to prepare for the move.” After Alan retired from his dental practice in 1991, the couple began preparing for moving from their spacious home to a one-bedroom apartment, which necessitated a radical downsizing of their possessions.

“Downsizing can be a painful procedure for some people,” admits Katharine. However, Katharine and Alan helped ease the stress of downsizing by utilizing an ingenious inventory checklist. This gave all three of the Jung’s children an opportunity to discuss items with their spouses and decide what they wanted. It also allowed the Jungs to dispose of any unwanted items. Despite the hard work and difficulties involved in the moving process, the Jungs found it to be a rewarding experience: “The process was truly a liberating experience for us, because we came to the understanding of how relatively unimportant ‘things’ are in our life.”

Reducing their baggage allowed the couple to completely change their lifestyle. They moved to a waterfront apartment in Baltimore, which they speak of fondly as “a wonderful place, in a great, urban environment.” Unfortunately, though, the living arrangement wasn’t as secure as the Jungs would have liked. Alan explains, “The landlord and his wife were people that I knew, and we had grown up in the same neighborhood. We were happy living with them, but they were getting older, and I began to wonder from time to time what would happen to us if they died. I just didn’t feel secure for the long haul in that environment, so I began to think of other options. My primary motive was to get Katharine into a position so that I could feel secure that if something happened to me she would be set.”

Alan talked about his apprehensions with Katharine and discovered that she was concerned for his future as well. After discussing it, the couple decided that it was important to ensure that their children did not have to make any retirement-related decisions for them. “I knew what it was like to have to make decisions for aging parents, and I didn’t want our children to have to go through that. These are difficult decisions and can be heart-rending and often the right choice is not really clear. So we thought it was best to eliminate all their potential worries, take care of ourselves, and let them get on with their lives,” recalls Alan.

After some preliminary research, the couple realized that a continuing care retirement community (CCRC) could offer them “the best of all worlds, since it offered comfort, safety, security, and freedom of movement at the Residential Living level. A seamless transfer between various levels of health care would be there too, if the need ever arose.” They started investigating CCRCs on-line and visited several communities in the Baltimore area. When they went to visit Carroll Lutheran Village, they knew they had found their home amidst the beautiful grounds and welcoming residents.

“What’s not to like about this place?,” asks Alan. “We have lived here for two and a half years now, and we couldn’t be happier. Everything we could possibly need or want is right here.” In fact, the two are very involved in the community. Katharine serves on the Hospitality Committee, which is an integral part of the Resident Association. The committee helps new residents settle in by providing them with dinner arrangements and introductions. As Katharine points out, “We want to make sure that we acquaint new residents not only with the physical campus, but also with the people and our way of life here. It’s incredibly important to help people adjust to the move because it can be very traumatic for some people.”

Katharine will have the opportunity to welcome countless new residents once the Village’s new expansion, Wakefield Overlook, is completed. Wakefield Overlook is a premier, full-service community that will include 82 modern apartments, 60 Village homes, and a Mission Square featuring a Wellness Center and Hospitality Center. The expansion project began in the spring of 2004 and, once completed, will nearly double the size of the Village. The project will add countless amenities to the community, including a 25-meter pool, a whirlpool, a spa, an exercise room, and several common areas.

Although Katharine and Alan have no plans to move from their current apartment in the Village, they are looking forward to enjoying the new facilities and to meeting new neighbors. Katharine relates, “The new Overlook is going to be an entirely different complex, and it will have a great community feel. All of the amenities will be available to all of us, and I’m really looking forward to the swimming pool.”

To individuals who may be considering a move, Katharine and Alan suggest, “Don’t Wait!” Katharine advises, “You have no real picture of how wonderful the freedom of living in a retirement community is until you’ve moved. It’s like living in any place, except you have the freedom to come and go as you please. You have all types of amenities available to you and no responsibility for home or ground maintenance.”

With all their plans settled, this couple now spends most of their time volunteering to improve their community and spending time with their children and grandchildren. From the beginning, they had a plan for the future and seeing that plan come to fruition has been very rewarding. Of the completed moves and their new lifestyle, Alan concludes, “Katharine and I have been truly blessed in this new season of our lives.” Katharine adds, “It is very important that people try to look forward to what they have to enjoy later in life.” Katharine and Alan Jung continue to do just that-look forward to their future.

“I always knew I was going to be in some kind of helping profession.” This is how Mrs. Hofstein explains her work as the administrator of the first apartment house for mentally ill adults on Long Island. The aptly named Hofstein House is still in operation today. Hofstein House provides independent apartments to 50 mentally ill adults, allowing them to retain their independence while providing them with the convenience of a social worker on-site, who offers counseling and assistance with locating a job.

Establishing and operating this facility wasn’t Mrs. Hofstein’s first stint with serving the needy though; she left her home in London to become a part of a Jewish relief unit in Europe during WW II. After a training program, she spent two years in Europe: “We were sent to Europe where we went through Holland. We got to Rotterdam the day it was liberated and we worked in Rotterdam for a while and then we went to Bergen-Belsoen when it was liberated. I was the child welfare officer in charge of all the children in the camp. This involved taking care of 83 children from the concentrations camps, who were all orphans.” While her work in Europe was emotionally challenging, it was certainly rewarding to help these children who so desperately needed her. However, one of the most unexpected rewards of her time in Europe was the opportunity to meet her future husband, an American solider from New York.

At the end of the war, Mrs. Hofstein returned to the states with her husband and started a daycare center in Brooklyn, where she worked until she became the Mental Health Association Director in Nassau, a job she held for 25 years. She retired from the position, and left her work at Hofstein house 3 years ago at the age of 77, but she still visits frequently and is continually involved in the operation of the facility. Of the challenging nature of her work, Mrs. Hofstein relates, “We were responsible for several hundred mentally ill adults, which can certainly be stressful. But it’s work that needs to be done, so you do it; at the time you don’t think about the stress of it. I loved my work, and I missed it for a time when I retired.”

Mrs. Hofstein quickly learned that retirement would offer much-deserved opportunities to relax and enjoy herself. After initially looking into a facility in Long Island, Mrs. Hofstein really began to enjoy the idea of living in a retirement community: “I got caught up in the idea of not having to cook and clean. If you’re still able-bodied, and my husband and I were at the time, it’s easy to want to stay in your own home, but I think it’s important for people to look ahead and realize there’s going to come a time when they don’t want to cook anymore. The idea of going shopping or making dinner every night absolutely appalls me now.”

When Sadie and her husband discussed their potential move with their son, he suggested that they move to a life-care community in the Philadelphia area, so they would be closer to him. Although the couple initially resisted the idea, they visited communities in Philadelphia and liked Martins Run so much that they decided to make the move. For the Hofsteins, Martins Run really met all their criteria: “We wanted to be in a Jewish community, and this is, but it was really the sense of warmth we got from the people that convinced us this was the right place. There’s no question that the people who work here are warm and friendly, but it is essentially the other residents, who were so welcoming.”

In fact, the “O.K.” sign outside her door is a program that was devised by, and is entirely operated by, residents. Mrs. Hofstein explains, “You put out the sign anytime after 4 o’clock in the morning and one person on each corridor is responsible for picking up those signs and putting them back on your door. If they don’t see the signs, they call you or knock on your door. If there’s no reply, they will call the central office. They’ve found people who have fallen in the middle of the night. It’s a very useful system.” It also is a clear demonstration of the compassionate, communal atmosphere at Martins Run.

It is the benevolent conduct of the other residents that has helped Mrs. Hofstein through the past year. Unfortunately, a short time after their move, Mrs. Hofstein’s husband became ill and died suddenly. Throughout this challenging time, Mrs. Hofstein has managed to keep a positive attitude, partially due to the support she receives from other community members: “Considering my husband died relatively suddenly, it should have been a terrible year, but it hasn’t been. I mean, I have made friends here. The environment is conducive to making friends; there’s no question about that.”

Mrs. Hofstein and the other residents are able to easily make new friends because of the variety of programs offered at the community. She relates that she has always been a “participator:” “I go to many things. I like the music programs here, as well as the writing class. I also go line dancing. Of course, there are always community outings too-to the opera or the theater. This is an active place.” For a woman who has worked so hard, this stress-free lifestyle is still a novelty. “I only have to get up in the morning and say, ‘what shall I do today to amuse myself?,’ relates Mrs. Hofstein. Secure in the fact that she will be provided for should a need for care arise, Mrs. Hofstein is free to fully enjoy herself.

After providing for so many others in need, Sadie has finally settled into the new-found role of care recipient, one which she fits her quite nicely. In fact, she strongly recommends that others follow in her footsteps: “I’ve talked to a number of would-be residents who are my age and older and they’re always not ready. The truth is most of them are over-ripe. I often think people do leave their homes too late. It’s best if you come to a facility when you’re still able to enjoy what all it has to offer.” Not only did her move prove to be terrific decision for herself but also for her children. She admits, “Martins Run is great because I am not totally dependent on my son. That works for him too. I like that aspect of it. There’s a good feeling about not having to be dependent on your children.”

After devoting so much of her life to social and volunteer work, Mrs. Hofstein has been thrilled with the opportunity to make new friends and expand her busy social schedule at Martins Run. “You will find that the folks my age who live on the outside often have limited social lives. Once people make the move, very few of them are sorry. The bottom line for most people is: will they make friends here? The rest of it’s all garbage. It doesn’t matter really–the food, the housekeeping, etc. — it’s are you able to form relationships here. For most, the answer is ‘yes.’” Mrs. Hofstein has certainly developed strong bonds with her fellow residents and her social calendar is booked for weeks in advance, with classes, outings, discussion groups, and card games.

As the sign outside her door relates Mrs. Hofstein is certainly ‘o.k.,’ in fact she is flourishing in her new home, which has become a place to relax and reward herself for a lifetime of hard work and good deeds, a legacy which is represented by the nearby Hofstein House plaque.