Be Like Bob
How Bob’s Reverse Mortgage Helped
Learn how a Reverse Mortgage helped Bob Increase his monthly Income. Since I wrote a column about reverse mortgages a few months ago, I have had a lot of folks make inquiries. With all the new changes FHA made recently to the program, they wanted to know more about how the various features could be used to enhance their retirement lifestyle. Other younger people called as well. They were interested in helping their parents stay in their home, and avoid the need to supplement mom and dad’s income personally in the process. So this month, I am doing two things. I am going to give two examples that illustrate a couple of common uses of the new reverse mortgage program.
Bob was 74 years old and owned a home worth $400,000, with an outstanding loan balance of $70,000, and a house payment of approximately $700/month. Bob’s prescriptions alone were running another $500/month and he had a golden retriever to take care of. On the other side of the balance sheet, his only income source was $1200/month from Social Security, and he was down to his last $60,000 of savings. Bob was suffering in quiet desperation. He had to make a decision each month whether to feed himself and the dog, or pay for his prescriptions. In addition, Bob knew his home needed about $30,000 in “deferred maintenance”. He also asked if there was any way to get some additional income, to make things a little easier.
Happy ending for Bob! His current mortgage was paid off and that eliminated his monthly mortgage payment. All he needed to do moving forward was to pay his tax and insurance payments each year (plus any other property charges and maintenance expenses). He got the $30,000 at closing to make the house livable again, and he received an additional income of $915/month. Now Bob has an income of $2115/month, and he doesn’t have to make any awful decisions each month. The golden retriever is well fed. Bob still has his nest egg of $60,000. Bob even decided to treat himself to cable TV, after 5 years without. Bob is happy again. Be like Bob!