My Autobiography: David Balleza K(C)atague: Are you Ready for a Reverse Mortgage?

Tuesday, July 1, 2014

Are you Ready for a Reverse Mortgage?

Last month I was thinking of taking a reverse mortgage or an HECM( Home Equity Conversion Mortgage) loan on our residence to supplement my income. I started to get information from Reverse Mortgage companies in our area and nationwide. I was swamped with calls from HECM lenders, but I did received enough information to make a decision whether HECM is now an action for me or later. But before I tell you of my decision allow me to summarize the information I received from the lenders.

1. What is a Reverse Mortgage?

It is simply a government insured home loan that allows you to convert a portion of the equity in your home for cash. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence or fail to meet the requirement of the mortgage. You must be 62 or older, have equity in the home and you must live in the home. You retained the title of your home. In general the proceeds of an HECM is tax free. No credit report is needed. You are required to receive 3rd party counseling. Last but not least, the fees are expensive, interest in your loan compounded and you do not get 100% of the equity of your home.

2. How much Can you Borrow?

The amount you can borrow depends on your age, the current interest rate, the appraised value of your home, sales price or FHA's mortgage limits, whichever is less. In general, the higher the value of your home, the older you are, the lower the interest rates, the more cash you may qualify for.

3. When does your loan due and Payable?

The loan must be repaid in full when you pass away or sell the house. The loan also becomes due and payable if,

a) you do not pay your property taxes and hazard insurance
b) you permanently move to another residence
c) you fail to live in the house for 12 months in a row and last
d) you allow the property to deteriorate and do not make necessary repairs

4. Can I have still an estate that I can leave to my heirs?

Upon selling your home, you or your estate will repay the cash you received from The HECM plus interest and other fees to the lender. The remaining equity belongs to you or your heirs. There is a high expense and compounded interest in your loan is incurred. It is very likely that when your loan is due, nothing is left to your heirs.

5. How do I received my monthly payments?

Tenure: equal monthly payments as long as one borrower lives and continues to occupy the property as their principal residence

Term: equal monthly payments for a fixed period of months selected

Line of Credit: unscheduled payments or installments in amounts of your choosing until the line of credit ie exhausted

Modified Tenure: A combination of Line of Credit and Monthly payments as long as you live in the house

Modified Term: A combination of Line of Credit plus monthly payment for a fixed period of months selected by the borrower
and

Lump sum

The above information is the basic information you have to know first before you sign up for your loan. If you need more details, talked to a reverse mortgage specialist, read the Internet and see the following video.

Personal Note: Based on the information above, I decided not to pursue taking a reverse mortgage because of the high fees and at this time of my life, I still have enough funds from my savings and pensions accounts. In addition, I do not need to deplete the equity of my home at a high expense. Maybe in another four years I might think again of this option when my pensions funds are depleted if I am still alive and kicking.

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Highlights of My Professional Career

In my more than 40 years of professional career, I have experienced both working rank and file, as well as supervising the work of subordinates. I have worked in four private firms and the Federal Government, the Food and Drug Administration (FDA), where I retired. I enjoyed the challenges and difficulties of both types of job situations. This is the highlights of my work experience story.

My first job after completing my doctorate degree was a Chemist for Chemagro Corporation in Kansas City, Missouri. It was a subsidiary of Bayer Corporation, a German conglomerate. I worked for the analytical chemistry department comprised of about fifty people; half that number was either chemists or biologists. My specific task was to develop analytical methods for the detection of pesticide residues in plant and animal tissues. I worked on my own, similar to six other bench chemists, and we all reported to the same supervisor.

The firm sponsored my visa conversion from a student to a permanent resident, and I was able to legally work and reside in the United States with my family. The company generously took care of its employees. At the end of each successful year, everyone received a 13th month salary bonus. The employees and their families celebrated wonderful annual Christmas parties in a downtown Kansas City hotel, with dancing and free drinks for the whole night.

Inasmuch as I enjoyed and loved working for Chemagro for five years, I found a new job which offered a substantially higher pay. Due to my exemplary work performance, my supervisor preferred and lobbied for me to stay with the company. I had to turn him down because they could not match the package presented by my new employer. It was also a chance for me and my family to move and live in the US west coast, where the mild winter climate is bearable compared to the Midwest.

My next job was at the agricultural research division of Shell Development Company in Modesto, California. I was a Research Chemist, and again I worked individually, same as five other chemists who all reported to a supervisor. My specific duty was similar to my previous job. I worked for them for five years, until the company decided to get out of the pesticide business. They closed their research facility affecting the jobs of more than 200 employees.

My third industrial job was with the agricultural research division of Stauffer chemical company, located in Richmond, California. I was a Senior Research Chemist doing the same project as my two previous jobs. I worked for twelve continuous years for the company, with outstanding annual job performance. I became a Principal Research Chemist, the highest attainable non-supervisory position.

One day in 1986, my supervisor informed me that my job had been eliminated, and I had one day to vacate the facility. It was the most dreadful lay off experience in my life. I felt anger, sadness and humiliation to be dismissed from work with one day notice, after all the years of hard work invested for the company. This was an unforgettable incident and was the gloomiest point in my professional career.
The company terminated sixty research employees, who were upset of the bad news.

One of the chemists was distressed and expressed his outrageous anger by threatening the company and its workers. He told his supervisor of his intention to bomb and burn down the laboratory. He was immediately escorted by the security staff out of the building and into his car. He was informed to leave behind his personal belongings; they will be mailed to his residence. He was warned never to show up again near the company premises or risk getting arrested.

My supervisor was kind and allowed me to take my time to pack up my belongings. It took me two days to clear up my workplace, after toiling for a long period in the same jobsite. We were provided clerical help and office space, in preparation to look for another job, such as updating our resumes, and using the computer and copy machine. We were given six weeks of separation pay plus benefits.

Fortunately, with the help of a friend who is a Church parishioner, I found another job thirty days after leaving Stauffer chemical company. He hired me as a senior research chemist and as a group leader with two technicians to supervise. It was in the same field as my expertise in my previous three jobs spanning the last twenty one years. My new employer was Chevron Chemical Company, and which was located in the same area as my former employer.

This job gave me the introduction and basic knowledge of managing the work of subordinates. I worked for Chevron Company for four and a half years. The company decided to consolidate their research facilities in Texas, and lay off all its research employees. This time I had enough distress and agony from working, and eventually getting laid off from several private companies. To avoid going through any more miserable layoffs, I made a vow that I would never again work for a private company.

In my work experiences, there were noticeable and unavoidable jobsite occurrences. One can never miss the office romantic relationships between co-workers, both illicit and permitted. Though it was frowned upon, there was a boss and staff relationship, which was used as a ploy to get ahead in the company. Some relationships had chemistry, no pun intended, but some never worked out. Oftentimes, there was a sense of distrust among bench chemists for some workers who unjustly obtained preferred work assignments.

Some employees resorted to bribing superiors to get special privileges, such as being able to attend choice conferences and meetings in exciting venues or locations. Likewise, politics was always present at the worksites. It was during an era when various forms of harassment, equal opportunity and discrimination laws were not yet enforced in the workplace. Occasionally, an unexpected chemical explosion happens in a laboratory setting, where luckily no one got seriously hurt.

In the three private companies I worked for, I was able to publish scientific journals for some of the research studies and analytical methods which I developed for the respective companies of Chemagro, Shell Development and Stauffer.

After deciding and making a vow to avoid working in the private sector, I made my new goal which was either to work for the state of California, or the Federal government in Washington, D.C. Four months after I lost my job in Chevron, I was lucky and joyful to be hired by the Food and Drug Administration as a review chemist in the fall of 1990.

In 1994 I was promoted as an Expert Research Chemist with a GS-14 rating. My expertise was on Anti-malarial and Anti-parasitic drug products. In 1997, I was again deservingly promoted to Chemistry team leader, supervising the work of six Chemistry reviewers including five with doctorate degrees.

As team leader, I was responsible for prioritizing, assigning, and assuring the technical accuracy of all chemistry, manufacturing and control issues for all new drug applications submitted to the Division of Anti-Infective Drug Products, Center of New Drugs.

It was part of my responsibility to give advice, instruct and promote high morale and teamwork in my group. My work in the FDA is confidential, until the drug patent on the products I worked on has expired. There are manufacturing supplements that I have approved that are now open for the public in the Internet.

In 1998, I won the Equal Employment Opportunity (EEO) Award. The citation reads, “For outstanding accomplishments in fostering the objectives of the EEO Program by hiring minorities and encouraging their professional growth while providing excellent leadership.” I have received numerous certificates of appreciation, awards in leadership and communications, commendation for teamwork and excellence in the accomplishment of the FDA mission. I have also received several letters of appreciation from private industry for my review work.

There are many good things working as rank and file while enjoying doing one’s job individually. It is a humbling, satisfying and productive experience, if one can work in harmony with one’s immediate supervisor. Working individually develops one’s skills in goal setting and scheduling. But in general, the financial rewards are less than a person who has supervisory responsibilities.

Managing the work of others has its challenges. Moreover, it develops one’s skill in handling and developing people, and the compensation rewards and benefits are better. Due to additional duties, responsibilities and leadership, supervisory work can be more stressful than working as a subordinate. However, supervisory jobs give one more personal growth and satisfaction, based on my personal experience. My work in FDA as a team leader managing the work of six scientists had been the happiest and rewarding work experience in my career in Chemistry. You might also like:

Tuesday, July 1, 2014

Are you Ready for a Reverse Mortgage?

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