By: Kevin A. Guttman, Reverse Mortgage Specialist – NMLS #384936
Buy A Home With A Reverse Mortgage .Luther Waters worked as a maintenance supervisor for a manufacturing company for 22 years before retiring at the age of 65. It was an industry he fell into after being laid off in his previous career as an equipment mechanic, his job for nearly a decade. He always considered himself someone who liked to fix and “tinker” with things. He loved home projects and had spent lots of time keeping his home in great condition. During his retirement, Luther was ready to have less projects and found home maintenance not as easy as it once was. However, he still wanted a garage so he could continue to “tinker” with the neighbor’s lawn mower and of course, his motorcycle.
Luther’s wife, Danita Waters, enjoyed working part-time at a florist shop. She always had a green thumb and enjoyed the interactions with customers. She appreciated Luther’s hard work and his handy abilities, but was also ready to sell their family home and downsize into something that didn’t require as much maintenance. She still wanted an area outside to plant flowers, though, especially roses.
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The Waters had been married 42 years, and had 4 grown children and 7 grandchildren. They had been entertaining family for years; but with grandchildren, they found themselves enjoying going to the kids’ homes for family events rather than hosting them. They enjoyed having the grandkids overnight when possible and as Luther approached retirement, they decided it was time to sell their four-bedroom family home and move into something with less upkeep.
They talked to their children about selling the family home; the kids had mixed emotions about it, but overall wanted what was best for their parents and supported their decision.
Luther and Danita were excited to find a townhome a few miles from their youngest daughter. It had a two-car garage and a small yard that allowed both Luther and Danita to continue the hobbies they loved, but with far less maintenance. The two bedrooms meant they could still have the grandkids over and there was a park within walking distance.
Danita had heard about reverse mortgage loans, but was unsure how that would work since they were just downsizing. Their home was paid off, so they knew that once they sold, they would be able to buy their new townhome outright. However, when talking to their reverse mortgage planner, instead of buying the home outright, they learned they could use a reverse mortgage loan in conjunction with the purchase of their new townhome. This allowed them to keep more than half of the proceeds from the sale of their home for retirement needs and put less money down to purchase the townhome. They also had a line of credit available to them if needed.
Reverse mortgage loan proceeds are usually tax-free*, unlike Danita’s income. The money they had put away for retirement seemed like enough, but it would cause them to live more frugally, and they both had concerns about outliving their income as they were both active and healthy. For them, they felt having the reverse mortgage funds available as a line of credit helped them by allowing them to access funds when they needed it for unexpected expenses, without fear.
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NOTE: Story is for illustration purposes only. The persons depicted herein are fictional and any resemblance to actual persons is a coincidence.
*This advertisement does not constitute tax advice. Please consult a tax advisor regarding your specific situation.