Maggie is widowed. She owns her home which is free and clear of a mortgage. We looked at the possibility of doing a reverse mortgage for her.
Her retirement income wasn't enough for her to live comfortably each month and she was getting desperate. Her friends told her to get a cash-out mortgage to help with her monthly bills, but she is 80 and her social security ($1,600) isn’t enough for her to qualify. Also, even though she didn’t have a mortgage payment, she still had property taxes and homeowners insurance to pay. This didn’t leave her enough to live on.
Here comes Wonderdog!
Her small home appraised for $857,000. She decided to take a monthly disbursement from her new Reverse Mortgage for the rest of her life.
She didn't take the maximum monthly amount that she could have though. Her fear was that if she had to go into assisted living in 10 years or so, she wouldn't be able to afford it. Here is what she did.
Instead of taking $2,900 each month which she could have done, she didn't need that much so she decided to take only $1,400. Together with her social security that brought her to a total income of $3,000 monthly which was more than she needed.
That left her with a line of credit of over $215,000. It was available to her whenever she needed it, and she could use it to supplement her $3,000/month income if necessary for when, and if she needs assisted living.
And she still doesn’t have to file a tax return!
Now she goes to lunch with her friends, visits her grandkids, and can take them gifts. This loan has truly changed her life.
And what about the equity?
In ten years, even after taking the lifetime monthly disbursement, she will still have equity off almost $750,000 plus whatever is still remaining in her line of credit.
She had the option of not choosing to take the monthly income for life, and instead, having a line of credit available to her for the full $416,000. That large amount was overwhelming to her though, and she was afraid of outliving it, so she decided to play it safe and take just what she needed as a guarantee for her lifetime. She still has that cushion of over $200,000.
Her kids are happy too. They were very worried about her finances and when they realized there would still be so much equity, they were all in.
A huge win! For me, too. I love doing these reverse mortgages when they can make such a difference in someone's life.