I recently received a call from a couple in Hemet. They are interested in finding out how a reverse mortgage can improve their retirement. I'm excited to meet with them because they have already improved their financial situation greatly by paying off their mortgage and now own their home free and clear. They receive Social Security and a small pension but don't have much in savings and are thinking about whether or not a reverse mortgage would help them to have a more secure retirement. I certainly think so and would love to hear your comments.
In their situation they have a home worth $350,000.00 they are both 75 years old. My proposal to them will read like this. $10,000.00 in cash at closing to beef up their savings account and then a growing line of credit in the amount of $205,555 for emergencies. They could also opt for a monthly tax free income of up to $1300.00 for as long as they live in the home.
The costs for the loan will run $9795.00 including Upfront Mortgage Insurance, closing costs and origination fee.
If they do not touch the line of credit, in about 10 years they will have access to a line of credit that started at $205,555.00 and would likely grow available credit of over $350,000.00. That could certainly come in very handy to pay for home health care if they need it (or any other emergency for that matter). Basically like a self funded long term care policy. Now, truth is the cost of skilled nursing care in their area averages at j$78,475.00 per year according to the Genworth Long Term Care - California Riverside County website cost of care table. And the American Association for Long Term Care estimates that 44.8% of applicants in this age group are denied long term care insurance. Update: 2.7.2019 I was contacted by a representative of the Association for Long Term Care Planning (ALTCP) today and she recommended this article about getting Long Term Care Insurance with Pre-existing conditions. Might want to take a look. ARTICLE
I think a reverse mortgage at this time would provide them with a source of emergency funds and peace of mind. What do you think?
If you would like to know how a reverse mortgage could help your retirement please don't hesitate to Contact Me.
By Deborah Nance
Your Local Southern California Reverse Mortgage Professional
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iReverse Home Loans, LLC, NMLS#810502 originates reverse mortgages in Alabama, Alaska, Arizona (MB-0919584), California, Colorado, Connecticut, Florida, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oregon (ML-5378), Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont (1164-MB), Virginia, Washington and Wisconsin.
Important Information: Reverse Mortgages are neither "endorsed" nor "approved" by the Federal Government. The FHA (Federal Housing Administration) provides certain insurance benefits for lenders and borrowers in connection with the lender’s HECM loans; the FHA does not make or originate loans. The owner(s) retain title to the property that is the subject of the reverse mortgage until the person sells or transfers the property and is therefore responsible for paying property taxes, insurance, maintenance and related taxes. Failing to pay these amounts or failure to maintain the condition of your property may cause the reverse mortgage loan to become due immediately. A reverse mortgage is a complex loan secured by your home. Whether such mortgage makes sense for you depends on your financial situation and needs. For these reasons, we strongly recommend that you consult with a qualified independent housing counselor, family members and other trusted advisers before making this decision. This website is not from HUD or FHA and was not approved by HUD or any government agency.