A reverse mortgage can help you stay in the home you love. But what if the home you thought you loved no longer fits your lifestyle and you want to move? Did you know a reverse mortgage can also help you move into a home that better fits your desires and physical needs?
The reverse for purchase is one product that many people do not know even exists. Slowly, but surely, this loan product is gaining recognition because of the benefits it provides, which include:
- Being able to purchase a new home without making a monthly mortgage payment for as long as you live in the home*
- Remaining the owner of your home*
- Being able to move closer to family or move to warmer climates
- Being able to downsize or move into a home that better suits your needs
Many clients use a reverse mortgage to purchase a home that is in warmer climates or one that is closer to their family. Still, others purchase a home that is smaller or better equipped for the physical demands of aging. Here’s an example:
Luke and Nancy’s children moved out a number of years ago and their house has become too large for them to maintain. They want to stay close to their children, who lived scattered through the metro Detroit area in Michigan, where they both have lived their entire lives. They keep active by taking their grandkids to such places as the Detroit Zoo, the river walk, and the DIA. They are also huge Detroit sports fans, so they want to live within driving distance of home games.
Luke and Nancy sell their two-story, four-bedroom home in Clinton Township for $200,000 and purchase a one-story, two-bedroom home in Royal Oak for $115,000. Luke and Nancy are 62, the youngest age to get a reverse mortgage, so their down payment will be one of the higher down payment requirements of the program. They need to bring $62,000 to close. They use the proceeds from the sale of their home to pay the down payment and are left with $138,000, which they use to pay off credit card debt and replenish their savings account. The rest of the mortgage for the new home ($53,000) is paid for by their reverse mortgage instead of the proceeds from the sale of their home.
With a smaller home, Luke and Nancy are able to spend their energies playing with their grandkids or cheering on the Detroit Tigers and Lions from the seats in Comerica Park and Ford Field.
*Homeowner is still responsible for taxes, insurance and property maintenance.