Kelly and George had an unexpected tax liability early in retirement. A payment plan helped, but this extra debt (along with the need for some credit card debt help) was a burden their monthly cash flow. They still had a mortgage payment. Had they retired too early and maybe their assets weren’t going to last? This became a huge worry.
Their financial advisor suggested they talk with Kim Dodge to find out if an FHA reverse mortgage was a good option for home financing in their situation. While nervous, since they didn’t know exactly what they were getting into, they trusted their advisor and decided to make the call.
As they spoke with Kim, they started to relax and feel that a reverse mortgage might be a good answer.
- Kim explained the options they had and how the home appraisal and value determined from it would affect their benefit.
- Kelly was pleasantly surprised when they did their required independent HUD counseling.
- The counselor asked them questions to see what they understood and she knew all the answers.
‘I was surprised at how much I’d learned and that I really understood.’
The Reverse Mortgage Loan Financing Choices:
Using a responsible estimate of home value based on internet and Kim’s team resources, they expected to need to bring a small amount of cash to closing because they were on the younger age for a reverse mortgage (age 62) and the reverse loan amount calculated by the FHA formula would not quite cover the payoff of the existing loan and closing costs. They discussed pulling a small amount from their retirement assets to cover this, as well as the appraisal and counseling costs.
Since they would not have to make a monthly principal and interest payment after the reverse was in place, they could take that extra cash-flow and apply it to their debts AND replace funds they took from their retirement to close the loan. This strategy worked because Kim and their Financial Advisor factored in how to allocate their income for several months until the debts were brought down.
The Reverse Mortgage Bonus:
And then another WIN! The appraised value of the home came in at a higher value than expected! Kim had planned responsibly for worse case, but the upside with a higher value meant their available loan amount and credit line were greater. They did not have to bring any funds to closing, and they were able to accelerate their payments of the tax bill and credit card payments.
They no longer struggle knowing they have an emergency fund in that reverse mortgage line of credit. As income rolls in each month and they finish paying off their credit card debt (that arose because of the unexpected tax bill cash-flow crunch) they can even make a payment on the reverse line of credit if they want! Making a payment lowers the loan balance on the line of credit, and of course, you can draw it right back out again for needs or wants too.
What to Do Next:
Kim’s clear communication about all the options available makes it straight forward to decide if a reverse mortgage is a good fit for your circumstance or for any seniors in your life. She will let you know what challenges may arise so you can make a well informed decision. If you decided to apply for a reverse mortgage with the Kim Dodge Team, it can be with confidence.