When people think of retirement, they often envision sitting on a beach, sipping fruity cocktails, and finally relaxing after years of hard work. Finally, a permanent vacation. Some people just dream of it. Others, make it happen.
For those who wish to move to paradise, a reverse mortgage may be able to help. You can use a reverse mortgage to purchase a new home and never make a monthly mortgage payment on that home for as long as you live there*. Not only that; it may help you afford more home than you think you can – especially in such expensive housing markets as those in San Diego or Hawaii.
Here’s an example:
Mike and Lauren had always planned to move to Hawaii after they retired from their jobs. After more than 40 years of work, they decide to sell their home near Philadelphia and move to Honolulu, Hawaii. They sell their home for $360,000. The median home value in Honolulu is expected to surpass $700,000 this year. With the $360,000 from the sale of their home, Lauren and Mike could get a studio or one bedroom apartment – maybe even a condo. But they want to live their retirement in the comfort of a home with enough room for family to visit.
With a reverse mortgage, Lauren and Mike could use that $360,000 as a down payment for a three-bedroom home that is worth $675,000. Lauren and Mike are 67 years old, so the estimated down payment they would need to bring is $356,000. This gives them $4,000 to put towards the new home or use to enjoy such nearby attractions as the Pearl Harbor Historic Sites, Aloha Stadium, and the Honolulu Country Club.
Since Honolulu is on a Hawaiian island, it is difficult to find a home with a ton of space for a low price. When you’re on an island, there is only a limited amount of space. You have to build up, not out. Thus, many people in Honolulu and much of Hawaii – much like those on the island of Manhattan – live in an apartment. If you’re buying a home with a reverse mortgage in Honolulu, it is important to remember that reverse mortgages cannot be used on apartments and some condominiums. With that being said, reverse mortgages are useful in helping people purchase an actual home that they may not have been able to afford on their own.
Retirement is meant for enjoying your hard earned, permanent vacation. After years of work, wouldn’t it be great to enjoy it in a place like Hawaii? Why not see how much of a down payment amount you will need to have in order to purchase a house in Hawaii?
*Homeowner is still responsible for taxes, insurance and property maintenance.