Conflict at Age 78

At 78, Alison is conflicted on how to meet her financial needs and leave something for her daughter when she passes away.  

The Situation

Alison is healthy and sometimes a little ornery (or so her daughter Amber lovingly says.) Since Alison’s husband died, she has not been as confident in her retirement finances, like she used to be. Mostly concerned about future in-home care costs when she likely will need assistance, she reached out to her daughter to discuss. She needed to prepare for possible emergencies. Additionally, a few important home repairs are needed and they don’t fit in her current budget.

Alison’s daughter Amber knew of Kim Dodge from an event where Kim illustrated a number of FHA Reverse Mortgage strategies for senior home owners. When Alison spoke with Kim, she felt immediately comfortable that she had someone on her side. Kim answered questions and communicated her choices in a way that made sense.

The Financial Challenge:

Alison’s current home loan balance was small (just $55,000), but the principal and interest payments strain her monthly cash flow. Alison wants a little more spending money to enjoy retirement. Her furnace is going out and she’s anticipating a cost of $10,000 to replace it. She has retirement funds, an IRA, that she could draw on but in her mind, that long term care money. Alison and her family had brought up the idea of a reverse mortgage before, but Alison and her late husband had assumed that would leave the home to the bank, and they wanted to leave something in their Will for their daughter.

The Solution:

A frank conversation and facts about the FHA Reverse mortgage with Alison and her daughter was needed in order to agree on a plan of action. Kim walked them through the program details and answered all the ‘what if’ questions. Alison was still worried that if she lived on some of her home equity, then she wouldn’t have anything to leave Amber after she died.

Well, daughter Amber had the answer for Mom. Amber said that the greatest gift her mom could give her was time where they could be together where mom was not worried about cash-flow. This worry had essentially taken over their relationship ever since Dad had died. Amber wanted her mom back so they could enjoy to the fullest, the years they had left together. Amber had her own home too, and didn’t need or want her mom to sacrifice for her. The FHA Reverse Mortgage line of credit option would help them achieve all these goals.

The Reverse Mortgage Bonus:

Refinancing included the Line of Credit Option. Alison will be able to access funds when she needs them; for her house, her personal care and for special times with her daughter Amber. The Line of Credit growth rate on all credit line funds, provides additional access to equity over time.

If an emergency arises, Alison can choose to draw money from her Line of Credit or from her IRA, whichever makes the most financial sense at the time. Kim reminded them that when Alison no longer lived in her home as her primary residence, the loan would be paid off after the sale of the home, all proceeds going to Alison or her estate/heirs.

Today, Alison is happy and relieved to have the furnace replaced and a stronger plan in place. She has peace of mind that the equity she and her husband saved up can provided this security and a little extra fun as well.

What to Do Next:

Kim communicates clearly about all of the home financing options available and we understand and encourage family involvement in discussing all aspects of the reverse mortgage, if that is what you want. We know that not all families have that option and that is fine. We are here for you either way.

If a reverse mortgage loan is not the best option for your situation, we’ll be the first to let you know. Call about specific plans or with general questions.