A tough choice for senior homeowners
By Alain Valles, CRMP, CSA, MS, MBA, Nonprofit Managing Director
The rock ‘n roll band, The Clash, had a hit song “Should I Stay or Should I Go?” that epitomizes older homeowners’ tough decision of remaining at one’s current home or moving.
Should you stay in your own home? Or would you be better off financially, to sell your home and move?
These are tough questions older 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 or HECM – 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. Note, you are always responsible for your home’s real estate taxes, insurance, and other guidelines.
For those qualified people, selling and downsizing to a less expensive home might be the best choice. A little-known fact by Realtors is in that situation, you could use a reverse mortgage to purchase you new home. This allows you to not use all of your cash to purchase your home and instead gives you the option of greater cash reserves for the next chapters of your life.
For some, they desire to move but their current home faces significant repairs or a failed septic system that must be replaced 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 trying to time everything simultaneously.
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 with one’s decision. For example, I suggest to my clients who are thinking of moving to do the following:
- Estimate your home’s current value. Contact a local trustworthy real estate agent to obtain a Certified Market Analysis (CMA) which will give their estimated sales price. Please contact me to receive your free 10+ page Home Value Estimator report.
- Try to view your home objectively and itemize what repairs, if any, are needed and how to best showcase your home.
- Next is the tricky step – try to identify your next housing option – perhaps become a renter, downsize, move in with family, or live in a 55+ community. I am happy to create different scenarios for your review.
- Contact a moving company to obtain a quote of transporting your belongings.
If this sounds like a lot of work, it is! So is trying to decide if you want to remain in your home.
And, if you decide you “should stay,” then you should take the first steps to learn the basics about a reverse mortgage. For those who may be considering a reverse mortgage or if your profession includes older individuals, then I would recommend investing 20 minutes to gain insight about the pros and cons of a reverse mortgage.
As a Managing Director of the self-funded 501(c)(3) nonprofit mortgage company, Helping Hands Community Partners, our mission is to educate people about housing options – including reverse mortgages. We are the only licensed nonprofit in Massachusetts that focuses on sharing reliable information about reverse mortgages and, when appropriate, we are approved to arrange them for eligible homeowners.
A reverse mortgage might not be the magic wand to solve all life’s challenges, but it very well could be the next best thing. Take the first step and get informed.
Get the Facts: Obtain your free “How to Use Your Home to Stay at Home” 36-page book
Please give me a call at 781-724-6221 or email [email protected] to receive your free copy of “Use Your Home to Stay at Home,” the official reverse mortgage consumer booklet approved by the U.S. Department of Housing & Urban Development and published by the National Council on Aging. This is a great place to get basic information.
Alain Valles is a managing director of Helping Hands Community Partners, Inc. and was the first designated Certified Reverse Mortgage Professional in New England. He obtained a master of science from the M.I.T. Center for Real Estate, an MBA from the Wharton School, and graduated summa cum laude from UMass Amherst. He can be reached directly at 781-724-6221 or by email at [email protected].