Retirement Planning In La Quinta

Is A Reverse Mortgage Your Best Case Scenario?

Are you considering a reverse mortgage, but feel unsure if one is right for you? I’ve guided many different people from all situations and walks of life through reverse mortgages, and they’ve seen amazing success. Here are real-life examples of how this financial tool helped my clients secure financial freedom and enjoy their retirement.

Scenario 1| Passing of a Spouse
Husband, 80 (deceased); Wife, 76
Riverside County, CA

The death of a spouse is a time of emotional grief, which is often intensified with financial stress. In one case, the husband was bringing in $1,800 in social security income and the wife received $1,200, for a total income of $3,000/month. The couple was paying $2,000 on their house every month ($1,500 in principal and interest and $500 in property taxes and homeowners insurance), leaving them with $1,000/month of disposable income. While not a lot, it was manageable—they didn’t have many other expenses to meet. When the husband passed away, the wife received the larger of the two social security incomes, which was $1,800. Therefore, she couldn’t afford the $2,000 costs of her home—let alone any other necessities for living comfortably—without draining her $20,000 emergency fund. An incredibly stressful time became even more so.

The surviving spouse weighed her options, and decided that taking out a reverse mortgage was her best-case scenario. So, that’s what we helped her do. And now, she no longer has to pay the $1,500 mortgage every month. (She still pays $500 in homeowner’s insurance and taxes, under federal law.) She is able to stay in her home comfortably, with the peace of mind that food, clothing, electricity—and dinner out every once in while in a while—is always, always within reach.

Retirement Planning In La Quinta

A reverse mortgage may help you be able to afford you quality care while staying in the comfort of your home.

Scenario 2| At-Home Care Needs
Husband, 79; Wife, 78
San Bernardino County, CA

If you or your spouse is facing health issues and the resulting financial burden, taking out a reverse mortgage may afford you quality care while staying in the comfort of your home. For example, one client has dealt with several illnesses over the past year. He and his wife had a nest egg, but quality care was becoming extremely costly. Over time, at $2,500/month, the at-home care bills put a shocking dent in their retirement savings. To be able to maintain the same level of care, they needed to access additional income from their home.

This couple’s home was valued at $300,000, and they owned it free and clear. We were able to help them set up a line of credit through a reverse mortgage, which they draw from monthly to pay his at-home care costs—all without ever touching their retirement savings. Instead of taking the reverse mortgage money as a lump sum, they opted for a line of credit, which grows every year. Now, their $147,000 line of credit is growing at 5.24% in its first year. This financial planning tool provided them with a safety net during a time of uncertainty, so now they can focus on recovery and care.

Scenario 3| Retirement
Husband & Wife, 70
San Bernardino County, CA

If you’re ready to fully retire, but are unsure if you can afford to, a reverse mortgage could be a very viable option. It was for one couple—both 70 years of age, and both receiving social security benefits ($2,600 total/month). With their monthly costs ($1,200 in principle and interest, $310 in insurance and taxes, and $520 in credit card bills), they both had to continue working full time. And they weren’t able to think about extra spending on things like travel.

Their home was valued at $390,000 with a remaining mortgage balance of $123,000. By taking out a reverse mortgage, they were able to pay off their mortgage and the entirety of their credit card debt. In addition, we were able to set them up with a $30,000 line of credit, that has a growth rate of 5.24% in its first year. A great financial burden was lifted of the clients’ shoulders, and they were able to retire with confidence and ease. Now, they have $1,720 extra/month to enjoy travel and leisure.

Richard Fitzpatrick is a Certified Reverse Mortgage Professional (CRMP) in La Quinta, California, with over 30 years of experience in the business. Call him today to discuss how a reverse mortgage can help you.