| Retirement incomes often aren’t enough to get by or make special purchases. Seniors can receive cash, a tax-free* monthly income and/or a credit line by tapping the equity in their home with a reverse mortgage. These loans are backed by the U.S. government and major financial institutions, and they never have to be repaid until the house is no longer occupied as the senior’s primary residence.
Chances are, you are already thinking about what you could do with money from a reverse mortgage. Senior citizens can use the money from a reverse mortgage for virtually anything. Here are the many uses our clients have shared with us:
Supplemental Income:
The number one reason seniors take out a Reverse Mortgage is to supplement their retirement income. For many seniors, Social Security is their only source of income. Others have small pensions that have truly become insignificant after countless rounds of inflation. Today, many senior couples are living in their own homes on less than $1,000 per month and for many singles, the amount is under $600. For them, a reverse mortgage is a godsend.
Home Repairs:
Many reverse mortgage borrowers turn to a reverse mortgage to help pay for home repairs.
Pay Off of Existing Mortgage:
Many people take out 30-year loans for new homes after reaching age 50. Trying to make a mortgage payment of even $300 to $500 per month on a fixed retirement income is a burden for many seniors.
Extra Money:
Trudy, a very active 75 year old widow, informed her Reverse Mortgage Specialist that while she lived in a very nice home and had ample income to meet all of her daily needs, she was simply not going to pass up another opportunity to take a trip. Her best friend and several others were taking a cruise through the Panama Canal from Florida to Los Angeles and she hated to have to say no. We were able to set up a substantial line of credit for her after an initial $20,000 cash draw at closing to pay for her trip, and she had a wonderful time!
Helping Relatives:
Often times a client wants to help their children or grandchildren. One client wanted to help her newly divorced daughter buy a condominium near her home. By taking out a reverse mortgage, she was able to give her daughter the down payment. A fringe benefit of this is that she will now get to see her grandson more frequently since they live so close by.
Spouse in Nursing Home:
Nellie T., a spry woman in her late 70’s, came to with a difficult problem. She was no longer able to take care of her husband as he had had a stroke a little over a year ago. She had recently placed her husband in a nursing home facility so that he could get the kind of care that he needed. Using the proceeds of her reverse mortgage, she is able to provide for her husband’s care with a steady cash flow for several years to come.
In-Home Care:
Carl S. is under the care of a professional guardianship service. He has to have someone living with him around the clock for assistance. Because Carl is in his late eighties, he was able to receive enough money from his reverse mortgage to pay for care as long as he lives in the home.
Property Taxes:
The tremendous increases in home values in some parts of the country have led to massive property tax increases. Until recently, many seniors simply could not afford to pay their taxes and were forced to sell their homes. Now, with the help of a reverse mortgage, the additional funds help cover those costs.
Buying That Retirement Home:
One of our clients, Kathryn S., has taken out two FHA Reverse Mortgages. The first was on her long time residence that she had built with her husband. The second was after her husband passed away and she moved into her retirement community condo.
Saving a Family Home from Foreclosure:
Chris and Annie P. have been together since 1946. After venturing into the restaurant business, they decided to launch a new business producing and selling rice pudding made from an old Greek family recipe. For 16 years the business supported three families, experiencing much success and growth.
Then the business began to struggle and, to overcome significant debt Chris and Annie signed a loan to restructure the debt. However, when Chris and Annie could no longer make the loan payments the business was shut down. The loan they had taken out included a substantial balloon payment, and they risked losing their home.
The combination of a sale of the business assets, the proceeds of a reverse mortgage on their home and donations from the community enabled the debt to be repaid — they no longer risk having their home foreclosed upon. In early 2001 the couple hosted a mortgage burning ceremony for everyone that helped them keep their home. Chris and Annie P. continue to this day to live happily ever after in their own home.
* Consult your tax advisor |