Home owners sometimes find themselves tapping their retirement funds or assets to cover their monthly expenses. And when “life happens” such as medical expenses or other emergencies they find themselves drawing even more money from their accounts. A reverse mortgage is an option to protect their retirement funds yet have the funds for their everyday living, maintaining their lifestyle or emergencies.
Ron, a recent borrower stated, “Initially we did the reverse mortgage to buy hearing aids and for the longer-run to have funds for ‘emergencies’ without having to use investment funds.”
After the passing of his wife, Darrel found he was drawing funds regularly from his retirement funds for his living expenses and other needs. He chose to do the reverse mortgage so he wouldn’t have to keep drawing from those accounts and paying the penalties that came with it. The addition of $300 tenure payment and $15,000 in his line of credit means he can leave the retirement funds to grow.
Dorothy joined me for a presentation to other seniors, sharing why she did the reverse mortgage. “I have lived in my home for many years. I ‘knew’ Social Security was going to take care of me… my mother had gotten by on it and I figured I would too.
I retired at 65. I had no hospitalization or a pension when I retired. I didn’t face those facts right away. I had invested and purchased stocks over the years in modest amounts. I figured that would be my answer to any and everything. When I wanted to travel I just cashed in part of a stock and I took off and did some great fun things.
“However we know the stock market took a plunge a couple of times and what I had was back down to half or less than what I had built up. Also I was having to use this in addition to my Social Security income. Fortunately I was able to have paid off my mortgage by the time I retired so I didn’t have those payments. I thought it would be easy street.
“I had a house paid for and was able to get a line of credit from the bank. Anything I wanted to do I would I just borrow the money on the line of credit. After that climbed I would cash some stock in to pay the line of credit.
“Pretty soon I needed a car. I took out a loan on the car. Pretty soon I’m paying the line of credit and the car payment. And I was using up my stock portfolio. I was owing more to the bank than I had stock to pay off all this line of credit. The stock broker I was talking with said, you have your house paid for, the best thing I could do would be to get a reverse mortgage.
“I have my reverse mortgage. I decided that as long as I was getting my Social Security and didn’t have to touch my stock, I wanted a reverse mortgage line of credit. My reverse mortgage line of credit would grow at nice increments – it was growing faster than my stock portfolio was growing. I also decided to take a minimal monthly payment.
“The reverse mortgage has given me a great feeling of security. I don’t have to touch my stock. My line of credit is going up every month as long as there are funds there. It’s much better than CDs.
“I’ve done home repairs, replaced my car and taken some funds to get my driveway repaired. My yard needed some attention that I had overlooked because I didn’t want to spend the money. So I’ve taken some funds for that too. I still have a nice sum in my line of credit and I haven’t had to use my stock.
“I watch the market go up and down and it’s not life and death like it had been before when I knew I just had that stock and when it was gone then what would I do.
“It’s worked wonders for me. I’ve been able to take trips with the money, repair my house, re-roof it, and do this and that. It’s given me ease of mind and it’s certainly helped my kids because at one point I think they thought they would have to help me financially and they weren’t looking forward to that. Now that worry is off their mind. So as long as I can, I will stay in my home, and that’s what I plan to do.”
Nine years after her closing she’s still in her home benefiting from her reverse mortgage.
© 2015 Beth Paterson, CRMP, Beth’s Reverse Mortgage Blog, 651-762-9648
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