Buying with a twist: Reverse Mortgages for senior buyers

Didier Malagies • August 20, 2024


In my work, I talk with many seniors. Many are reluctant to leave their homes even when those homes are no longer suitable for their needs. Sometimes, the concern is emotional, but more often than not, it’s financial. What happens if they sell their current home but can’t cover the costs of a new place, especially in a market characterized by record-high home prices?


Many seniors aren’t aware of a sensible financial tool that could ease their worry and help them thrive during their golden years: the home equity conversion mortgage, also called a reverse mortgage. Or, if they are aware of this option, they may view it with skepticism based on longstanding misconceptions. This is a shame because the lack of accurate and current information prevents seniors from considering all their options. Over the years, I’ve made it my mission to educate consumers, real estate professionals, and financial planners so that more seniors can get the advice they need to make intelligent and informed decisions.


The truth is that many financially savvy seniors use home equity conversion mortgages as part of a broader financial planning strategy to enhance their cash flow and minimize withdrawals from investment portfolios.

My client, Barbara (a pseudonym used for privacy), offers a good case study. After her husband passed away, she realized she was living in “too much house” and wanted to move closer to her grandkids. She was prepared to sell, but the proceeds would not be enough to cover a cash purchase near her family. Although she and her husband had spent a lifetime building up a retirement fund, she was understandably nervous about making those funds last. At the suggestion of her financial advisor, we walked through her options to purchase a new home:


Pay cash for a new home by pulling a lump sum out of her retirement income to supplement the proceeds from her home sale, which might result in a larger tax bill from the distribution and would certainly cut down the time those assets would serve her during her lifetime. 


Take out a traditional mortgage requiring a monthly payment of principal and interest, which would increase the amount of her monthly retirement distribution, again potentially resulting in a higher tax bill and most definitely decreasing the life of her retirement funds. 


Use a reverse mortgage with her purchase loan to boost her purchasing power without requiring principal and interest payments during her lifetime.


By supplementing the net income from selling her existing home with a reverse mortgage for purchase, Barbara improved her purchasing power by almost 40%. Still, she also avoided pulling any additional money from her retirement funds and eliminated a monthly mortgage payment at the same time. She used her most significant asset, her home, to help ensure she would thrive throughout her retirement. Like Barbara, I recommend consulting a financial or tax advisor as part of the borrowing process.

Despite the outdated misconceptions around these highly regulated mortgage products, they are an innovative financial tool when used wisely in an overall financial plan. We owe it to our seniors and their advisors to ensure that current and accurate information is available and easy to understand. When homeowners are armed with knowledge, understand the benefits and the potential risks, and know the right questions to ask, they can make the best decisions for their longstanding health and financial wellness




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Now offering a 3rd Mortgage

By Didier Malagies • October 6, 2025
A third mortgage is an additional loan secured by the same property after a first and second mortgage already exist. It’s essentially a third lien on the property, which means it’s in third place to be repaid if the borrower defaults — making it riskier for lenders. Because of this higher risk, third mortgages typically: Have higher interest rates, Offer smaller loan amounts, and Require strong borrower profiles or solid property equity. 🤖 How AI Is Transforming 3rd Mortgage Lending AI tools can make offering third mortgages much more efficient and lower-risk by handling the data-heavy analysis that used to take underwriters days. Here’s how: 1. AI-Powered Lead Generation AI platforms identify homeowners with significant equity but limited cash flow — ideal candidates for third liens. Example: AI scans property databases, loan records, and credit profiles to spot someone with 60–70% total combined LTV (Loan-to-Value). The system targets those borrowers automatically with personalized financing offers. 2. Smart Underwriting AI underwriters use advanced algorithms to evaluate: Combined LTV across all liens, Income stability and payment history, Real-time credit behavior, Local property value trends. This allows the lender to make quick, data-backed decisions on small, higher-risk loans while keeping default rates low. 3. Dynamic Pricing AI adjusts rates and terms based on real-time risk scoring — similar to how insurance companies use predictive pricing. For example: Borrower A with 65% CLTV might get 10% APR. Borrower B with 85% CLTV might see 13% APR. 4. Automated Servicing and Risk Monitoring Post-funding, AI tools can monitor the borrower’s financial health, detect early signs of distress, and even suggest restructuring options before default risk rises. 💡 Why It’s Appealing Opens a new revenue stream for lenders and brokers, Meets demand for smaller equity-tap loans without refinancing, Uses AI automation to keep costs low despite higher credit risk, Attracts tech-savvy borrowers seeking quick approvals. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329

Always look at the 10 year treasury

By Didier Malagies • September 29, 2025
Great question — the 10-year U.S. Treasury Note (T-Note) is one of the most important benchmarks in finance, and it’s tightly linked to interest rates. Here’s a breakdown of how it works and why it matters: 1. What the 10-Year Treasury Is It’s a bond issued by the U.S. government with a maturity of 10 years. Investors buy it, loaning money to the government in exchange for: Semiannual coupon payments (interest), and The face value back at maturity. Because it’s backed by the U.S. government, it’s considered one of the safest investments in the world. 2. Yield vs. Price The yield is the effective return investors earn on the bond. The yield moves inversely with the bond’s price: If demand is high and price goes up → yield goes down. If demand falls and price goes down → yield goes up. 3. Connection to Interest Rates The 10-year Treasury yield reflects investor expectations about: Future Federal Reserve policy (Fed funds rate). Inflation (higher inflation expectations push yields higher). Economic growth (slower growth often pushes yields lower). While the Fed directly controls only the short-term Fed funds rate, the 10-year yield is market-driven and often moves in anticipation of where the Fed will go. 4. Why It’s So Important Mortgage rates & lending costs: 30-year mortgage rates generally move in step with the 10-year yield (plus a spread). If the 10-year goes up, mortgage rates usually rise. Benchmark for global finance: Companies, governments, and banks often price loans and bonds based on the 10-year yield. Risk sentiment: Investors flock to Treasuries in times of uncertainty, driving yields down (“flight to safety”). 5. Practical Example Suppose the Fed raises short-term rates to fight inflation. Investors expect tighter policy and possibly lower inflation later. If they believe inflation will fall, demand for 10-years might rise → yields drop. But if they fear inflation will stay high, demand falls → yields rise. Mortgage rates, business loans, and even stock valuations all adjust accordingly. ✅ In short: The 10-year Treasury is the bridge between Fed policy and real-world borrowing costs. It signals market expectations for growth, inflation, and Fed moves, making it a crucial guide for interest rates across the economy. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329 

AI underwriting to human underwriting and this is what happened

By Didier Malagies • September 24, 2025
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