By: Kevin A. Guttman, Reverse Mortgage Planner – NMLS #384936
Bill and Doris Miller loved their home. They didn’t like the idea of selling it and moving into something smaller because they loved their neighbors, the neighborhood, and their church. However, the home wasn’t working for them anymore. Bill, a former construction worker, was having a hard time taking the stairs to the upstairs bedroom. He had become permanently disabled when he lost part of his left leg in a motorcycle accident.
Doris was a bookkeeper for a home service provider in town that provided residential plumbing, heating, and electrical work. She’d been there for seven years, loved her job, and didn’t have retirement on her mind. And, while Bill was 65 and happy to be at home, Doris was 56 and loved being out of the house, except when she was entertaining. Frequently, Doris would come home from work, prepare dinner, and then head upstairs to the bedroom alone while Bill slept in the recliner, as it was too painful for him to climb the stairs and too dangerous for him to go down them.
To stay in their house, Bill and Doris recognized they would need to make some modifications to it. However, they weren’t sure how they were going to afford this goal and were concerned about using their precious retirement funds to reach it. They went back and forth on whether to sell the house and purchase something else, but their overriding desire to stay in their home led them to consider a reverse mortgage. Unlike a home equity line of credit, which would require them to make installment payments, the reverse mortgage loan allowed them to tap the equity of their home without monthly mortgage payments during the life of the loan (except taxes, insurance, and maintenance.) It also offered loan proceeds, which are usually tax free*.
The thought of having mortgage payments seemed like a stressful option given their single income and regular medical bills. They also wanted to wait as long as possible to start receiving their Social Security benefits. With a lump sum payout from the reverse mortgage loan, they were able to make the modifications needed to add a master bedroom to the main floor. In addition, they added a laundry room, so Doris didn’t have to go to the basement to do laundry. This created significant main-floor living, which was the solution they needed, without having to sell the house.
Doris felt more comfortable knowing that her husband would be safer not having to take the stairs, and she enjoyed being able to sleep beside him again. Bill says that he didn’t know he had missed his bed as much as he had, and found it much more comfortable than the recliner.
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.