A tough choice for older homeowners
By Alain Valles
Real estate values continue to increase but so do major living expenses. Does it make more sense to downsize or figure out a plan to remain financially independent at home? It reminds me of the old Clash song – “Should I stay or should I go?”
These are tough questions senior homeowners ask themselves when faced with rising costs of real estate taxes, health care, and unexpected life events. Many are making monthly mortgage payments! Coming up with the cash to meet these obligations can be difficult.
Steps to moving
Selling and downsizing to a less expensive home might be the best choice. But for many, it’s easy to say you’re moving but hard to do so. I suggest the following to help gather the facts:
- Contact a local trustworthy real estate agent to obtain a Certified Market Analysis (CMA) which will give an estimated sales price.
- Get feedback from your agent on what repairs, if any, are needed.
- 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 and who you’ll donate half your belongs from your downsize.
- Review your budget and lifestyle choices.
- Then complete your pros and cons moving list and decide.
If this sounds like a lot of work, it is! In fact, studies show that the majority of older homeowners would prefer to remain in their homes and that the primary reason they move is due to financial concerns and stress.
Remain at home with a reverse mortgage
But is selling your home the only option? Few of us want to leave the place we have called home for decades.
A Home Equity Conversion Mortgage – also known as a reverse mortgage – may allow you to be financially independent, maintain your lifestyle, and give you additional access to cash reserves if ever needed.
A reverse mortgage is one way to have financial freedom without moving. 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. In all scenarios, one remains responsible for paying real estate taxes, insurance, property maintenance and other guidelines.
Top uses of reverse mortgages include:
- Paying off current mortgage or equity line;
- Home repairs or renovation;
- Supplement your monthly cash flow;
- Pay off other debts and credit cards;
- Help family members;
- Access to rainy day/emergency funds; and
- Funding an active lifestyle.
Your first step is to learn the basics about a reverse mortgage. Initial questions to see if you qualify include:
- Age (one person must be at least 62 years of age);
- Estimated home value and condition;
- Current mortgage balance, if any; and
- Income sources and credit history.
The key is getting the facts. There is a great deal of misinformation circulating about reverse mortgages. Call me to receive the only federally approved consumer booklet “Use Your Home to Stay at Home” that is published by the National Council on Aging. This is an excellent place to start. Call or email me and I’ll forward a copy free of charge. My philosophy is “reverse mortgages are not for everyone, but everyone should know about them.”
Alain Valles, CRMP, MBA, CSA 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 [email protected].