The decline in home values has caught many senior homeowners off guard. Much of the equity that they had been planning on as part of their retirement financial strategy has evaporated. What can they do? Here is a all-to -common scenario:
Dick and Jane, both in their mid-sixty’s still live the the home that they raised their children in. The home is larger than what they need or want and they would like to downsize. They had always thought that they would be able to sell their home and have plenty of money left over to buy a new home that is more in line with their needs and desires. They had planned to pay cash for their next home so they wouldn’t have house payments. Unfortunately, the decline property values has spoiled their plans. It looks now as if they will only have about $150,000 left after paying off their existing mortgage and home equity line of credit. This isn’t nearly enough to purchase the type of home they desire. The homes that they like are in the $300,000 range.
With a reverse mortgage, Dick and Jane can make a $120,000 down payment on a $300,000 home and never make another house payment as long as they live!
What is a reverse mortgage? A reverse mortgage is an FHA-insured, non-recourse loan that enables senior homeowners (age 62 and older) to convert a portion of their equity into tax-free funds. There are no income, health, employment, or credit score qualifying requirements. The amount that individuals qualify for is based upon age, property value and current interest rates. Funds maybe obtained in a lump sum, monthly payments, a line of credit or a combination of these options. Homeowner’s retain title to the property and continue to own their home.
Sound to good to be true? Call me and I’ll refer you to a reverse mortgage specialist to give you the details!
Rowland
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