I recently closed a reverse mortgage for a lovely couple in Murrieta, who found themselves trapped in a financial box.
Their home was absolutely gorgeous, professionally decorated and maintained to perfection. It appraised for $375,000.00 and they had a small line of credit with a balance of $78,000 requiring a monthly payment of about $400.00
10 years ago they had a good amount of money in savings and retirement accounts. But, in the past few years they had depleted their savings by loaning money to family members in two different situations to invest in “sure fire” business opportunities. They also took cash from their home equity line of credit to help out one of their children who had lost his job. None of the three “investments” have even begun to pay back and this wonderful couple was now seeing a cash flow shortage. Each month there just was a little more month left, than money. Not a lot, but some. They could see that in just a few years the rest of their savings would be depleted and they would be up against a financial wall.
I met with them at their beautiful home and went over the ins and outs, pros and cons, costs and benefits of the FHA HECM Reverse Mortgage program. I left them with all the information they would need to proceed should they decide that was what they wanted. After a couple of days of talking and running it by their kids and CPA they decided to move forward.
They attended the HECM counseling session over the phone and when it was completed, they gave me a call and said, “Okay Debbie, we’re ready to get started!” less than a month later their reverse mortgage was completed.
Now, they have ZERO mortgage payment and a growing line of credit in the amount of $160,000.00 for emergencies. They have set up a budget and since they no longer have a mortgage/heloc payment they have more cash flow. Some of that extra cash flow is going to a “travel account” so they can continue to pursue their passion for traveling. Their plan is to not touch the line of credit letting it just grow and grow so that when they are 80, 90 or more and REALLY need help they will have the available funds to take care of themselves. (We’re still hoping and praying that the relatives will pay them back on their “investments”, but this couple is now better prepared for real retirement no matter.)
As always I love to hear your feedback and comments.
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.