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A Real Life Reverse Mortgage Example

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Reverse mortgages offer seniors the option to leverage the equity they have in their house to receive payments from the bank.  While receiving payments sounds like it might be too good to be true, I wanted to share a real life example from a couple who recently wrote to me.  

This is a couple who has lived in the same home for 40 years.  As you might imagine, when living in the same house for that long, the house needed some repairs.  That’s a lot of wear and tear!  They knew that if they sold the house, they wouldn’t get what they were looking for because of the work it needed.  They were also denied a traditional mortgage because they didn’t show enough income.

The situation is one that was ideal for a reverse mortgage.  They met all of the requirements for a reverse mortgage:

  • Both were at least 55 years old
  • The house was their primary residence
  • They owned their home outright (free and clear of any mortgage)
  • They were up to date on home owners insurance and property taxes

They also had a genuine financial need, which is a key component that is often overlooked when it comes to reverse mortgages.  We can all agree that receiving payments from the bank is great, but it’s important to remember that a reverse mortgage is a loan.  It’s best to have a plan for this money.  For this situation, the need was there: remodeling a house.

When it comes to a reverse mortgage, there are several options to receive the payments from the bank.  This includes: a lump sum, payments at fixed intervals (a predefined term or tenure), a line of credit, or a combination of those options.  

This couple elected to have the payments via a line of credit.  This allowed them the freedom to draw on that line of credit as needed to make the necessary repairs on their home at their pace.  If they choose not to use the all of the line of credit, they can save it for when they need it, or not use it at all.

It’s certainly nice to hear about real people using a reverse mortgage to help meet their needs.  If you’re thinking about a reverse mortgage and need more information, I’d suggest checking out this blog post.

PS. EAG is happy to be featured in FeedSpots for "Top 20 Reverse Mortgage Blogs & Websites"

 

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