By: Kevin A. Guttman, Reverse Mortgage Planner – NMLS #384936
The Salazars, Robert and Debra, met in the summer before their senior year of high school when they were working at the same restaurant together, he as a bus boy and she as a hostess. They haven’t been apart since. To listen to their story, they sound like the perfect family – high school sweethearts who fell in love, got married, had kids, and bought a home. They had their ups and downs, but overall, life had been good to them so far. Their four children had families of their own and they would frequently rattle off all of the activities their children and grandchildren were up to, complete with photos.
They really only had one concern as they settled into retirement, and that was their $202,000 mortgage balance. Their youngest daughter, Alicia, had decided to become a business owner and open a dance studio 15 years ago. She needed help with financing it, and because she didn’t have sufficient collateral for the bank, Robert and Debra wanted to help. They decided to refinance their mortgage to free up money to lend to their daughter for her business venture. Unfortunately, Alicia’s business never took off and it failed after two years, but not until wiping out all of her savings. The Salazars knew they would likely not be repaid and forgave their daughter of the debt.
While they had made extra payments whenever possible, in retirement on a fixed income, and age 66 and 65, respectively, they knew it would still be another 14 years before their mortgage was paid off. Their $1500 a month mortgage payment was something they could handle now, but it was tapping their funds quickly and they weren’t sure if it was the best use of their precious funds. They spoke to some close friends, Benny and Bea Garcia, because they had sold their home to get out from under a mortgage. The Garcias lamented the fact that they couldn’t control their housing costs because their rent was going up every year. They mentioned they were looking to buy a home, and were going to use a reverse mortgage so they could be mortgage free.
Sounding too good to be true, the Salazars asked for the contact information for their Reverse Mortgage Planner to look into what help they could receive. They weren’t sure if they had to own their home free and clear, but knew that talking with a professional could only help. If nothing else, they thought they could refinance and maybe lower their monthly payments. The Salazars met with the reverse mortgage planner who was able to explain how the process and reverse mortgages worked. Based on the home’s value, their current mortgage balance, their age and interest rate, they were able to qualify for a reverse mortgage that allowed them to stop making mortgage payments.
In many ways, the Salazars felt like they got their lost time and money back through the reverse mortgage. Those years of paying on the loan were now allowing them to leverage the equity in their home, while making it possible for them to continue to live in it. They admitted that eliminating their mortgage payment has alleviated some financial stress and they are sleeping better at night.
NOTE: Story is for illustration purposes only. The persons depicted herein are fictional and any resemblance to actual persons is a coincidence.
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