Purchasing a home with a reverse mortgage allows you to buy your dream home without having to pay a monthly mortgage payment for as long as you live there.* Each person’s reason for moving is different. Some want to downsize their home, while others simply wish to move closer to family or live in warmer climates year round.
For many people, changing temperatures isn’t for the luxury, it’s for the health benefits. Sure, it’s nice to live out your retirement years on the beach, under the sun’s warm glow, but some older Americans find themselves moving to warm climates to relieve pain from arthritis, hip replacements, or bad joints. They may also choose to escape the cold in order to escape dangerous driving conditions or the physically-demanding labor of snow shoveling during harsh winters.
Here’s a great example:
Colleen has lived in northern Michigan her whole life. Two years ago, she was in a car accident that required her to get a titanium hip replacement. Since then, the cold weather has bothered her hip area, causing pain. On top of that, she also has trouble trudging through the snow and a few slips on the ice have sent her to the ER. She decides enough is enough and looks into getting a home in Tampa Bay, FL.
Colleen sells her Michigan home for $150,000. The price of the home she wishes to purchase in Tampa Bay is $205,000. Colleen has no other money to use to purchase her home other than the money from the sale. She would either have to give up on her dream home or she would need to take out a mortgage for the remaining balance of the new home, making monthly payments until that mortgage is repaid.
OR Colleen could use a reverse mortgage to purchase her dream home and never have to pay a mortgage on the home*. She will even have money left over to use however she wants. Here’s how it works.
Colleen is 63 years old. Given her age and the price and location of her new home, she will have to pay a down payment of about $107,000. With the rest of the money from the sale of her home (approximately $43,000) and the money she is now saving from not having to pay a mortgage*, Colleen can enjoy a pain-free retirement with some extra money to spend on visiting The Florida Aquarium or watching the Tampa Bay Rays play at Tropicana Field.
Colleen would have saved even more money if she was older. Age is one main determining factor in calculating the down payment. The older you are, the less money you will need for the down payment. So, if Colleen was 72 years old, her down payment for the same home would be $98,000. The lower down payment would give Colleen even more money to save or use to enjoy her new life in the Sunshine State.
One of the benefits of living in Tampa Bay is being able to relieve joint pain while also being able to afford the luxury of such nearby beaches as Clearwater Beach and Fort De Soto Park, one of TripAdvisor’s Top 25 U.S. Beaches. In fact, Florida features 663 miles of beaches and 1,197 miles of coastline to enjoy.
If you’re thinking of moving south for the beaches, warm weather, or improved wellbeing, a reverse mortgage for purchase may help you do just that. Call one of our licensed experts to learn more about the program.
*Homeowner is still responsible for taxes, insurance and property maintenance.