Below are actual examples of how a reverse mortgage can be used for more than just supplemental retirement income.

All the Things She Wanted To Do

Kay, a 76 year old widow, lived in a manufactured home with her daughter. She was considering a reverse mortgage to supplement her income and make some needed repairs. Her manufactured home did not have a 433A certification for being fixed to a permanent foundation. The cost to get this was beyond her means, and she was afraid she was not going to be able to get the loan. However, her loan officer helped her find a company willing to do the work needed to receive the 433A and delay payment until the funding of the reverse mortgage. The home value came in at $325,000 and Kay was able to draw $190,000, as she pleased, and did all things she was hoping to do.

Relax and Enjoy Retirement

Sue and Darrell, ages 71 and 77, had a loan balance of $348,000. Darrell wanted to retire, but would not be able to manage the $2300/month mortgage payment on his retirement income. The home was valued at $1,200,000, but the maximum FHA claim limit is $625,500. Based on that limit, they qualified for $342,000, which meant they had to bring in $6000 to escrow to make up the difference. Sue and Darrell were happy to do so, because with no more mortgage payments to make, they felt they could finally relax and enjoy retirement.

Reverse Purchase – "I feel like I won the lottery"

Bob and Lisa, both 77 years old, wanted to buy a home near their daughter. They couldn't get enough cash out of selling their current home to pay for the next home in cash, and their income wasn't enough to qualify for a regular mortgage. They did, however, have enough money to make the required down payment for a purchase using a reverse mortgage. They were able to buy a $450,000 home close to their daughter, using $193,000 as a down payment (about 43%). The reverse mortgage made up the difference and now they have a nice home near family with no mortgage payments at all. Lisa literally said, "I feel like I won the lottery!"

Early Gift to Loved Ones

Kurt and Gina, ages 68 and 71, were able to make ends meet for their own needs, but their children were having financial problems. They decided to get a lump sum with a low fixed rate on their house, valued at
88,000, which they owned free and clear. They ended up with $213,000 for their bank account. This put them in a great position to help their children and grandchildren with the occasional smaller gift or with something really significant like college tuition. Kurt and Gina figured that since the equity of the house was going to the kids anyway, why not make some of it available now, when the kids really need it and they can enjoy seeing them get it?

No More Mortgage Payments

Chuck, a 79 year old widower, was struggling to make ends meet. His remaining mortgage balance was $225,000 with a monthly payment of $1750. In retirement, his fixed income was less and less able to cover all his bills. He saw the reverse mortgage as a way to stay in his home and still free up a large chunk of income. However, he could not proceed right away because he owned a condominium in a complex that was not FHA approved. With the help of his loan officer, an FHA approval package was submitted to the condominium's management company and they filled out the necessary information. The package was then submitted to FHA for processing, and after about 3 weeks the approval was granted, and the loan process could move forward. With an appraised value of $525,000, he was able to have his mortgage paid off and received more than $80,000 in a line of credit he could draw from at will. Not only was Chuck pleased, so were many of his neigh bors in the complex who could now take advantage of the complex being FHA approved.

Conservative Investments and Home Improvements

Beth, a single woman age 62 had a home that she owned free and clear. She was self-employed and wanted more security, as work was slow, and with the state of the economy she wasn't sure when or if business would pick up again. Her Financial Planner recommended a reverse mortgage. The home was appraised at $630,000 and she received $327,324. With these funds she planned to make some conservative investments, tackle some long-delayed home improvements, and supplement her income.

Rebuild Their Cushion

Richard and Helen, both age 70, thought they were set for retirement, with several properties and a number of investments. But, because of an economic turndown, their investments were suddenly worth much less. Then Richard lost his job. The home they were living in was upside down in value, so they couldn't do a reverse mortgage on that home. They ended up doing a short sale on the primary residence, and moved into one of
their rental homes that had equity. With a value of $195,000, they were able to pay off the existing $91,000 mortgage with a reverse mortgage, eliminated their mortgage payments and got about $13,000 in their pocket to help rebuild their cushion.

Repairs and Travel

Anne, a widow, age 80, lived in a condo in an FHA approved condo complex. The condo needed a number of repairs and upgrades, but she did not have the financial resources to do that. A few of the repairs were necessary just to pass the FHA appraisal, and a repairman was located who agreed to do the repairs and defer payment until after the close of the loan. With a value of $355,000, paying off a mortgage balance of about $121,000, she received more than $86,000. With this money, Anne was not only able to pay off the repairs already done and complete others, she was able to take a trip with her daughter and have a liquid financial cushion she never had before.

Synopsis:

I hope these people's stories have given you an idea of the wide variety of situations that can be improved with a reverse mortgage. For many people, a reverse mortgage may be the only tool that will make it possible for them to retire. For others, it's a matter of improved lifestyle, being able to take trips, afford in-home skilled care or to make needed improvements to adapt the home to their changing needs. Some people just want to feel secure, knowing that they have the financial reserves needed to be able to deal with life's surprises. There are myriad other ways that people are using reverse mortgages to enhance their lives. We encourage you to call or email us and add your own story to those above.