my partner is 71, I am 75, We own our condo in CA the balance on the mortgage is 52,000 and the approx value is 150,000-160,000. is this program the best choice for us?
You know, you used the magic words in there, “..the best thing for us“. We are of the opinion that reverse mortgages are not for every borrower and the little bit of information that you have given doesn’t really give me a chance to answer your question. Borrowers have to ask themselves if the reverse mortgage program is consistent with their goals and if it will meet their needs.
Without knowing your exact birth dates I might be a bit off of the benefits but I can get pretty close (the amount you would receive will be based on the age of the younger borrower but if your partner will be 72 within 180 days of the closing of the loan, you would receive higher benefits).
You would be able to pay off your current loan and have up to about $9,000 available to you at closing or any time in the first 12 months and then another $26,281 after 12 months for a total line of credit of about $35,281.
This amount grows annually on the unused portion so at the end of 12 months if you did not use the line, the total amount available to you would be just under $36,800. The line continues to grow at a rate equal to interest accrual plus the mortgage insurance renewal premium (currently 4.303%) on the unused portion of the line annually.
So whether or not the loan is a good choice for you depends on your circumstances. If you were looking for $100,000, the reverse mortgage will not get you access to that amount of money.
If the cost of the condo (HOA, taxes, insurance, etc) and your living expenses without having to make a mortgage payment is still too high, then the reverse mortgage would not be a good option for you because you would only be delaying a problem later if your costs of living still exceed your income.
If your primary goal is to have a lot of equity in the property to pass to heirs, you need to know that the reverse mortgage will accrue interest and will lower your equity in the property over time and would not meet that goal.
If however, having no mortgage payment makes a big difference in your finances and makes the difference between struggling or being comfortable, the reverse mortgage may work well for your circumstances.
If the amounts available to you will allow you to do the things you need to do or want to do but cannot without the use of the loan, then this may be just the right thing for you.
If you have heirs that have their own homes, are not reliant on any equity you pass to them or you have no heirs, then this may not be an issue for you at all and a reverse mortgage may be a perfect alternative for you.
The bottom line is that the reverse mortgage is like any other loan in this respect, it is not right for all borrowers but works extremely well for those borrowers whose needs or goals match well with the product. You need to ask yourselves if this loan will meet your needs and goals and then proceed accordingly.
If you have a question about how a reverse mortgage may be able to work for your situation, call us Toll Free (800) 565-1722 or calculate your eligibility with our free online calculator.