I got a phone call yesterday from John C. who wondered if home values had risen enough for him to now qualify for a reverse mortgage (was short to close when he first inquired in 2010). The answer is MAYBE! And recently the answer was yes for a couple right here in Riverside.
Two years ago, I met with a couple in Riverside who were looking to get a reverse mortgage in order to payoff their current mortgage. Unfortunately, based on their home value and age, a reverse mortgage wasn't able to provide enough funds to work for them.But now it's a different story - With home values rising here in Riverside about 20% since last year and low inventory fueling a current price uptick of 6.8% in just the past quarter - this couple is now able to access enough money to not only payoff their mortgage with a reverse mortgage, but will be able to set up a growing line of credit for future emergencies.
In 2011, when I first met them their home was worth about $250,000 and their mortgage balance was $180,000. At 71 years old (youngest borrower) a reverse mortgage was $20,000 short from paying off their mortgage.
Now, 2 years later, the home is worth about $295,000 and they are two years older (73) the mortgage balance to payoff is less, about $174,000. A reverse mortgage now will payoff their current mortgage AND set up a line of credit of $21,000 that will grow over time.
Goodbye $1,046 mortgage payment for the next 23 years! Hello peace of mind knowing that they can stay in their home. They are even planning to make some payments on the reverse mortgage which will not only help to keep the balance down (preserving equity), it will increase the line of credit.
I just love a happy ending! Next, I will be researching John's home value and running some numbers for him.