Here are some examples of what you can do with a Reverse Mortgage
Pre-Inheritance Gift To Daugther
Reverse Mortgages are NOT just for senior home owners who are having serious financial problems. Rather, there’s a wide range of seniors who can benefit from this program. Elaine’s situation provides a good example as to how more affluent individuals can utilize it.
Elaine is 86 years of age and lives in Seattle. She built her home in 1956, has lived there ever since and owns it free-and-clear. She has an extensive investment portfolio, and her primary source of income is the interest that she earns from it. This provides a very comfortable lifestyle for her.
Elaine’s daughter lives in another state and she’s in going through a lengthy divorce. She would like to move back closer to her mom, but needs additional funds to make a down payment. Elaine wants very much to assist her (a pre-inheritance gift, of sorts), but she doesn’t have the ready cash to do so. She also doesn’t want to sell any of her stocks or other investments, since that would reduce the income that she receives from her portfolio.
How We Are Helping Elaine
Elaine’s home has a value of approximately $600,000. Given her age, she is qualified for a Reverse Mortgage line of credit of almost $414,000. Elaine plans to draw $100,000 to give to her daughter, and the rest of the funds will be available for any future needs. As long as Elaine continues to live in her home, he won’t be required to make any payments on the money that he’s drawn, and the unused portion of the line of credit will actually continue to grow in value!
This is really a “win-win” situation for both Elaine and her daughter. The daughter will receive the funds that she needs now, rather than at some point in the future when she would otherwise receive money through inheritance. Elaine has the pleasure of helping her daughter, and having her live close-by. And she’s still able to continue living the comfortable lifestyle that she’s been enjoying with no loss in income.
Pay Off Bills
Kay was an 84 year old widow, living in her Lake Stevens home, when I first met her. Despite her age, she was still quite active. Kay’s only sources of income were a small pension and Social Security benefits. Between the two, she was able to “get by” fairly well. However, there wasn’t a lot left over for “extras”, like travel, which she dearly loved.
How We Are Able To Help Kay
From the outset, Kay and I spoke at length about what she wanted to do with her life, and how she might use a Reverse Mortgage to accomplish her goals. Ultimately, she decided that this program was her best option. With the Reverse Mortgage that I helped her obtain, Kay did the following:
- Paid-off her existing home mortgage and her car loan (yes, Kay was still driving!). This relieved her of two monthly payments that totaled over $850 per month, which substantially increased her cash flow!
- Remodeled her bathroom to make it more accessible (including installation of grab bars and a walk-in tub).
- Purchased new hearing aids.
- Assisted one of her daughters by paying-off her car loan.
- Established a line of credit with the remaining funds, which she planned to use for travel, and perhaps do some investing!
The flexibility of the Reverse Mortgage program allowed me to tailor a strategy that was perfectly suited to meet Kay’s needs. Many other senior homeowners are facing similar situations- I can help them, too!
Establish a Line Of Credit
Many people believe that Reverse Mortgages are only for seniors who are having serious financial problems. That is simply not the case. Ed’s situation provides a much different perspective on how this program can be used.
Ed is 80 years old and lives in Snohomish. He built his home back in 1968, and owns it free-and-clear. After a long illness, his wife passed away this past June. However, Ed is still in good health, and the idea of hanging around his house alone everyday is quite depressing. He used to be very active in a yacht club, and would like to get involved in boating again. However, he can’t afford to buy a boat on his retirement income.
How We Were Able To Help Ed
Ed’s home is valued at approximately $240,000. Given his age, he is qualified for a $110,000 line of credit through the Reverse Mortgage saver program. Ed’s now shopping for his new boat, and when he finds it, he’ll draw the necessary funds from his credit line and pay cash. The rest of the funds will be available for any future needs. As long as Ed continues to live in his home, he won’t have any payments to make on the money that he’s drawn, and the unused portion of the line of credit will actually continue to grow in value!