Meet Jeff Graham of Fairway Independent Mortgage. He is a proud member of our local Tacoma + 253 community and we were thrilled to catch up with him about all things reverse mortgages. In this interview, we break down what a reverse mortgage is, how they work, and if it might be right for you!
We sat down with Jeff to learn more about Reverse Mortgages, here's what we learned:
“I believe that God wired me to help people. I figured out at a young age that money touches all facets of our lives to a degree, and if I can help people make smart decisions about their money, then it’s very rewarding for me, very fulfilling for me, and I enjoy it. That’s what really gets me up in the morning and keeps me going when things get tough.”
Jeff begins our conversation with this. Jeff Graham has been in financial services for the better part of his adult career. He’s had his hand in insurance, financial planning, banking, and most recently mortgages. He has been with Fairway Independent
Mortgage for five years and deals mostly with reverse mortgages, which he describes as complicated in essence, but can really make sense for certain people to take advantage of.
So what exactly is a reverse mortgage?
A Reverse Mortgage, or Home Equity Conversion, is an FHA government-backed loan that allows you to leverage the equity in your home so that you don’t have to make payments anymore. It is just like any other loan that has to be repaid, but you don’t pay anything until you leave your home. To qualify, you must be at least 62 years of age, you have to live in your house as your primary residence, and you have to pay your taxes and homeowners’ insurance on the home.
Here’s a real-life example: You have been in your home since 1965 and purchased it for $30,000 initially. Today, in this market especially, your home may be worth $500,000. Depending on how much you owe, or if you owe anything, you could be sitting on over $400,000 in equity. A reverse mortgage loan allows you to take out cash now that will be subtracted from the proceeds when you sell your home in the future. The mortgage gets paid off, whatever balance is owing, and you move on with life.
Too good to be true?
There is sometimes a negative perception when the words reverse mortgage come up, and many folks are skeptical. It’s not conventional, it’s different, so it’s a little scary. But Jeff says it is really just a matter of understanding the facts and weighing the options that will make living your life a little more comfortable. “A lot of times people will come to me with the idea of a cash-out refinance. They want to rebuild their bathroom, or redo their kitchen or expand or whatever the case is. I put together the application and find out the wife is 65 and the husband is 67. The house is worth $500,000, they owe about $80,000, and they need about $100,000 to do these improvements. I’ll show them both ways. I’ll do a proposal with a regular mortgage, and show them what their payment will be. And then I’ll ask them, ‘How about I do the exact same thing, but you don’t have to make a payment?’ Immediately people know I’m talking about a reverse mortgage and don’t want that. If you’re 67 years old, and you take out a 30-year fixed mortgage, or even a 20-year fixed mortgage, you’re going to have this mortgage, statistically, until the day you die. And so with that thought in mind, why not leverage your asset and utilize a different kind of mortgage to make your life better. It really is a matter of just understanding, it’s just a different way to do it.” Just like a VA loan has a funding fee rolled into a home loan, a reverse mortgage has an upfront mortgage insurance charge that is part of the loan. It is 2% of the appraised value of the home and this charge goes directly to the FHA. “If you live in your house a really long time, it is obviously going to be a bad deal for the bank. That mortgage insurance is what keeps the program going and quite frankly, for what the mortgage does, it’s well worth it,” Jeff says.
How do you know if this is the right option for you and your family?
Of course, everybody’s circumstances are different, and a reverse mortgage may not be the best fit. Jeff says to simply give him a call. He is more than happy to sit down with you and have a conversation. As he said at the beginning, he loves to help people make the financial decisions that will improve their lives now! “I could bore you to tears with lots of stories, but with regards to the reverse mortgage, it always ends well. I’ve never had a client scenario end in a negative way.”
To get in contact with Jeff and Fairway Independent Mortgage:
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