Solano Real Estate Scene: Reverse mortgage simply a loan
My Uncle Joe and Aunt Betty own their home free and clear.
The value of the home is $1.4 million and their property taxes are only $1,800 per year because they bought the home 45 years ago in 1975. The one-story house is in good condition and is on an average size, relatively low maintenance lot in a safe neighborhood in San Mateo County.
They are both 88 years old and very healthy and happy with their life, their home and their neighbors.
Their income is $4,500 per month, which is made up of Social Security and a small pension. They just paid $45,000 cash for a new roof, new windows and a new heating and air conditioning system, leaving them approximately $15,000 left in the bank.
They now own a home worth $1.4 million and have only $15,000 in the bank.
If they were to sell the house today, they could put $500,000 tax-free money in the bank and pay cash for a beautiful $450,000 home in an over-55 community in the Sacramento Valley or Palm Springs and they could buy a mansion in Texas for $450,000, but they want to remain here and stay in their home forever.
Now that they have almost run out of cash reserves, they are setting up a HUD-insured and -regulated Home Equity Conversion Mortgage line of credit just in case they need any funds in the future for special assistance around the house or they decide to finally achieve their lifelong dream of visiting Ireland while they are still healthy enough to travel.
It’s true what you hear on the TV commercials, a reverse mortgage is simply a loan that doesn’t have to be paid back until both Aunt Betty and Uncle Joe leave the home, and if they both head upstairs in 10 years at 98, then their son and daughter just need to either sell the house to pay off the debt or keep the home and refinance and pay off the $200,000 or $300,000 their mom and dad used over the past 10 years.