Reverse Mortgages Provide Valuable Tool For Seniors

By THERESA SULLIVAN BARGER |Special to The Courant
November 2, 2008

Michael, Cyncy Abel

MICHAEL AND CYNCY ABEL enjoy the Oyster River near their Old Saybrook home. They recently got a reverse mortgage, allowing Cyncy to retire and the couple to spend more time together. (PATRICK RAYCRAFT / HARTFORD COURANT / October 24, 2008)

Cyncy Abel laughs when talking about how her quality of life has improved since she and her husband, Mike, got a reverse mortgage on their Old Saybrook home.

The reverse mortgage allowed her to retire from her full-time job so that she’s able to work in her garden, help her husband in his hand-carved-sign business and take three weeks in early spring to visit friends and family down South.

Since taking out a reverse mortgage nearly a year ago, the couple says, they have peace of mind. They’re still frugal, Mike Abel says, but the reverse mortgage paid off the mortgage on their $500,000 Cape and provides a modest monthly income to supplement Social Security and retirement savings.

“We couldn’t figure how in the world we were going to be able to afford for me to retire,” Cyncy Abel said. “It was either [get a reverse mortgage] or move south. Four of our five children are in the area.”

They didn’t want to move, and they didn’t want to liquidate retirement investments, they said. Their children own their homes and supported the Abels’ plan, knowing they’d get little inheritance.

A reverse mortgage allows people 62 and older to borrow against their home’s equity. The loan isn’t paid off until they sell the house. There is no income or credit check, but the home has to be their primary residence. Seniors who obtain a reverse mortgage must first pay off their traditional mortgage and any outstanding property taxes, using reverse mortgage funds if they like.

The 90 percent of borrowers who get an FHA-insured reverse mortgage through the federal Department of Housing and Urban Development are required to receive consumer counseling from a HUD-approved counselor.

Reverse mortgages don’t have to be repaid until the last homeowner dies or moves out of the house. The funds can be taken in a lump sum, as a line of credit, in monthly payments or as a combination of these options.

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