Benefits of a Reverse
- Eliminating a monthly mortgage payment allowing the borrower to stay in the home for the rest of their life
- Accessing equity in the home to supplement retirement, pay for unexpected expenses, pay for travel or other needs
- Accessing equity in the home in the form of monthly payments, a lump sum or line of credit
- All proceeds from the home are tax free
- Requires very little income and credit to qualify
- Proceeds from a reverse do not impact Social Security or Medicare benefits
Reverse Mortgage Requirements
- Sufficient equity in the home (typically 50% or more is needed)
- Youngest borrower 55 years or older
- Must be the borrower’s primary residence
- Borrower to stay current with HOA fees (if applicable), taxes, and insurance
- Maintain the home in reasonable repair
Reverse Mortgage Client Examples
Howard and Donna: Ages 78, 76;
Pay off High-Rate Debts and Eliminate their Mortgage Payment
Howard and Donna are retired and live on a fixed income of about $3,400/month. Their monthly expenses exceed their income by about $1,100/month. Over time they have accrued additional debt and became concerned their only option was to sell the home, pay off the debts and leave San Diego to a much more affordable part of the country. They were referred to us from their financial advisor and we were able to complete a reverse mortgage eliminating their monthly mortgage payment of $2,200 in addition to accessing funds of $115,000. These funds allowed them to pay off their debts, make some minor improvements and stay in their lovely home! Since they no longer need to make a monthly mortgage payment of $2,200, they can live comfortably within their monthly budget and have additional reserves if needed.
Susan: Age 73;
Supplement Retirement
Susan’s husband passed away unexpectedly, and he was the breadwinner. Susan relied on the income from her husband in addition to her social security payment to pay their monthly expenses. While they had saved a modest amount for retirement and had paid off their home it wasn’t sufficient to meet her monthly expenses without her husband’s income. She was able to access her equity to supplement her retirement, stay in her beautiful home and still avoid making a monthly mortgage payment for the rest of her life in the home.
Tim: Age 87;
Medical Expenses
Tim loves living in his home in Irvine and had paid off his mortgage. He is aging and now requires additional medical care. While he saved for retirement his current savings aren’t sufficient to cover these additional costs. In counsel with his children, they determined the reverse mortgage was the best method to pay for these costs. It allowed the children to avoid the financial burden of paying them out-of-pocket and was the most equitable approach for the three siblings. He takes a monthly distribution to pay these costs.
Carol: Age 64;
Recently divorced
Carol was recently divorced and while she was awarded a decent amount of assets including her dream home, she didn’t have sufficient income to qualify for a traditional loan to pay off the existing mortgage. Since a reverse mortgage only requires sufficient income to cover your taxes and insurance she was able to qualify for a reverse mortgage and retain her dream home.
Jim and Roslyn: Ages 68, 67
Financial Flexibility
Jim and Roslyn are planners and have worked hard to establish decent retirement savings. They enjoy travel and appreciate the flexibility a reverse mortgage brings them. Roslyn just retired and Jim will retire shortly so they are worried about the step down in income that will transpire. They pursued a reverse mortgage to eliminate their monthly mortgage payment and have a line-of-credit to provide financial flexibility. When their investments are down, they plan to draw on their reverse mortgage. When their investments are up, they plan to draw on their retirement account. They are using their reverse mortgage to manage their liquidity, diversify and maximize their investments with their financial advisor.
Jerry: Age 68
Home Purchase With a Reverse
Jerry owned a 4-bedroom home in San Marcos with substantial equity that was bigger than he needed. With a modest retirement account, he was looking for additional ways to increase his savings. Ultimately, he determined to sell his home to downsize and purchased his next home with a reverse mortgage. It allowed him to reduce his living expense by eliminating a mortgage payment and provided additional equity which he invested with his financial advisor.
