But then her car needed a major repair!
The Financial Challenge:
Shoot! We know to expect things to wear out and need repair. But we can underestimate them, especially when several occurrences happen in a short timeframe. Now some additional debt on a car has pushed the budget outside her comfort zone.
When asking her financial planner about withdrawing some additional funds from retirement assets, they discussed the importance of the longevity of those assets. He suggested she speak with Kim Dodge to see if a reverse mortgage could be a help. Her home was the right style for aging in place, and she had help with great neighbors nearby. She was where she was meant to be, but the budget could not handle unexpected expenses.
The Financial Solution:
With a reverse mortgage on the home valued at $530,000, Connie was able to pay off the current mortgage of $210,000 and take out $29,000 at closing to pay off higher interest debt. In addition, she had additional line of credit funds available now for unexpected expenses.
The Reverse Mortgage Bonus:
It seems simple, but Kim Dodge helped Connie with more, a deeper understanding of how she could squeeze more value out of her reverse mortgage loan. Here is where her initial draws out of the reverse mortgage went:
#1. The old conventional mortgage was required to be paid off (I know, obvious) and the result was Connie no longer had to make a monthly mortgage principle and interest payment of $1,185. Where could those dollars that Connie was used to sending off to her old conventional mortgage company be best applied now?
#2 Connie drew out $29,000.00 at closing to pay off other debts. That eliminated another set of required monthly payments. Cash-flow was looking pretty great now. Connie could easily pay for the car repairs now.
Connie could now better manage her cash flow. She still had additional reverse line of credit funds for un-foreseen expenses, like her car repair, but without the required mortgage payment. She use those now available dollars to make payments on her line of credit. The reverse loan balance would get smaller, the credit line was getting bigger and she had still preserved her options on where to apply her monthly income for the most interest savings.
What to Do?
Kim has helped many evaluate the use of a reverse mortgage to gain more stability with their retirement income to expense ratio. Understand your options to maximize cash-flow choices in retirement.