Many of us have goals that we hope come true one day. Steve W., aged 64, wanted to pay off his mortgage by the time he reached age 62.
He and his wife of 20 years, Pam, live financially secure lives. Steve has spent his entire 40-year career selling plumbing supplies, while Pam, who is 68, works for a company that specializes in embedded computing.
Every year, Steve creates a family budget which he and Pam strictly follow. Steve is also a savvy real estate investor who co-owns several apartment buildings that provide additional income.
But things happen in life. Goals that we develop early on in our careers don’t always turn out as planned. In Steve’s case, when he finally reached 62, there was still a sizable amount of debt on the couple’s 2,200 square foot, two-story single family home in San Diego County.
Fortunately, Steve had heard about reverse mortgages from a friend who attended the same church. This person owned a mortgage company and was a loan officer who sold reverse mortgages. Steve shared his reasons for considering a reverse mortgage and asked his friend whether it made sense to consider getting one.
“I felt a reverse mortgage was worth looking into because at this point in time we’re not interested in relocating or downsizing,” said Steve.
After he and Pam carefully considered their options, the couple got a reverse mortgage two years ago. The loan amount they qualified for did not pay off their existing mortgage entirely, so Steve wrote a check from his savings account to close the gap and allow the transaction to proceed.
The end result is that Steve and Pam no longer have a monthly mortgage payment to worry about.
“Our monthly payment was around $2,000 a month,” said Steve. “Now I am investing that $2,000 toward our retirement instead of giving it to the bank. For me, the reverse mortgage made a lot of sense from a financial planning standpoint.”
Steve said he plans to retire at 70. “Being able to invest $24,000 to $25,000 a year for the next six years now that my mortgage is paid off is a nice chunk of change.”
Steve is also quick to point out that home values in his area have appreciated on average by 6.6 percent over the past 20 years. “I have a million dollar home that goes up in value by $66,000 a year minimum – last year it increased in value by eight percent or $80,000,” said Steve. “My point is that every year my reverse mortgage balance grows by $25,000, but my home appreciates more, so I am still in the black. If ever decide to sell my home, I can pay off my reverse mortgage and use the remaining equity to downsize and buy a smaller home.”
Read more real life reverse mortgage stories on our site at https://www.reversemortgage.org/Borrowers-Stories.