A tough choice for senior homeowners
By Alain Valles, CRMP
Should you stay in your own home? Or would you be better off financially to sell your home and move?
These are tough questions senior homeowners ask themselves when faced with rising costs of home ownership, including taxes and maintenance. Many are even still making monthly mortgage payments! Coming up with the cash to meet these obligations can be difficult.
But is selling your home the only option? Few of us want to leave the place we have called home for many years.
A Home Equity Conversion Mortgage – also known as a reverse mortgage – may give you the financial freedom to choose. You can stay in your own home with no required monthly mortgage payment and have access to a monthly cash flow or have a significant reserve line of credit if money is ever needed.
For those people who are qualified, selling and downsizing to a less expensive home might be the best choice. A little known fact: you even could use a reverse mortgage to purchase a new, smaller home. This allows you to not use all of your cash to purchase your home and could provide additional cash reserves for the next chapters of your life.
Some people desire to move but their current home needs significant repairs, or a failed septic system must be updated before the home can go on the market. A reverse mortgage might be the solution to obtaining the necessary funds to correct the situation in order to receive the maximum sale price when the house is sold.
Another challenge is the concern of timing the sale of the current home with the purchase of the new home. One scenario is to obtain a reverse mortgage on the current home and use the loan proceeds to pay cash on the new home. This can minimize the stress of timing the transition.
For those unsure if they want to move or stay in their home, I find the exercise of analyzing the moving process can be very informative and help in the decision. For example, I suggest to my clients who are thinking of moving to do the following:
- Contact a trustworthy local real estate agent to obtain a Certified Market Analysis (CMA) to get an estimated sale price for the home
- The agent can also give feedback on what repairs, if any, are needed and also how to best showcase your home
- Try to identify your next housing option – perhaps become a renter, downsize, move in with family, or live in a 55-plus community
- Contact a moving company to obtain a quote of transporting your belongings
If this sounds like a lot of work, it is! But so is trying to decide if you want to remain in your home.
The first step is to learn the basics about a reverse mortgage. For those who may be considering a reverse mortgage or if your profession includes older individuals, I recommend investing 20 minutes to gain insight about the pros and cons of a reverse mortgage.
Alain Valles, CRMP and president of Direct Finance Corp., was the first designated Certified Reverse Mortgage Professional in New England. He can be reached at 781-724-6221 or by email at av@dfcmortgage.com. Archives of articles from previous issues can be read at www.fiftyplusadvocate.com.
