Working a 40 hour week at a very physically demanding job, Len continued to work in order to cover their mortgage payments. After hearing about a reverse mortgage, they contacted me, got educated with the facts and decided to proceed. Once their reverse mortgage was closed and their conventional mortgage paid off, eliminating mortgage payments Len was able to retire. With no mortgage payments, he and his wife, Maricarol are now enjoying their retirement, living in their Minnesota retirement home close to their children giving them the opportunity to spend more time with their children and grandchildren. They said, “Without the reverse mortgage Len would not have been able to retire.”
Trying to make ends meet and make his mortgage payments, Jack is still working. Having completed his Home Equity Conversion Mortgage (HECM) application, he is anxious to get to the date of his closing so his mortgage will be paid off with the reverse mortgage and his cash flow improved.
A mortgage with special terms for seniors, a reverse mortgage allows those 62 and over to keep the title, remain in their home with no income or credit score qualifications, no monthly mortgage payments, and a due date when the home is no longer their primary residence or their 150th birthday. (A jumbo reverse mortgage does have a credit score qualification, however.) Considered a lien against the property the IRS generally does not consider the reverse mortgage loan advances to be taxable income.
Offering more flexibility, the reverse mortgage proceeds can be received in monthly payments (for life or structured to borrowers needs), line of credit (with a growth rate), lump sum or a combination of these.
The loan amount is determined by the home value, age of the borrower (the older one is the more they can access), interest rate and program chosen. The fixed rate option requires all proceeds to be drawn as a lump sum, the adjustable rate allows the flexibility of the funds to be received in monthly payments or a line of credit. One’s circumstances will help decide which program is best for their situation.
At 79, Mike was still working to supplement his Social Security income. Then he injured his knee and couldn’t work any more. Without his work income he couldn’t afford to cover his living expense, which included a $700 mortgage payment, let alone his additional medical expenses.
Mike did a reverse mortgage and with his proceeds, his conventional loan was paid off as well as some other bills. He now has a better cash flow because he doesn’t have to make any mortgage payments. And having chosen the monthly payment option, and he is receiving monthly payments to replace his working salary.
He’s very relieved that he doesn’t have to worry about where the money is going to come from to make his mortgage payment or maintain his lifestyle. Even with his knee healed he doesn’t have the need to work and he doesn’t have to worry about losing his home if he couldn’t make a mortgage payment. He now has security, independence, dignity, and control during his retirement.
If you know someone 62 and older thinking they can’t afford to retire, have them explore a reverse mortgage. Being educated with the facts the reverse mortgage may well be their answer to retiring.
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