Reverse Mortgages - Case Studies

A reverse mortgage from Seattle Mortgage Company can help senior citizens meet virtually any financial need or simply provide greater security and peace of mind.

From providing supplemental monthly income to completing needed home repairs to paying for their grandchildrens college education, a reverse mortgage can help address a wide range of financial needs such as:

Supplemental Income
Home Repairs
Pay Off of Existing Mortgage
Extra Money
Helping Relatives
Spouse in Nursing Home
In-Home Care
Buying That Retirement Home
Saving a Family Home from Foreclosure

Supplemental Income:
The No. 1 reason people take out a reverse mortgage is to supplement their retirement income. For many seniors, Social Security is their only source of income. Others have small pensions that have become less significant after the impact of inflation. Today, many senior couples are living in their own homes on less than $1,000 per month and for many singles, the amount is under $600. For them, a reverse mortgage is a godsend.

One client is Frank who, when we first met him, was trying to live on $190 per month. He had tapped out his Railroad Retirement Fund and depleted his savings account when he first contacted us. By obtaining a reverse mortgage, Frank was able to tap into some of the $200,000 home equity he had built up over the years. The reverse mortgage provided him with about $700 per month as long as he remains in his home.

There are also a large number of people who are getting by on a month-to-month basis. However, they are not able to handle setbacks involved in owning and maintaining a home. When furnaces break down, the paint starts to peel, water heaters go out, the roof needs repair or the property taxes are due, there simply is not enough money in the budget. This uneasy existence appears to be the norm for scores of seniors, but a reverse mortgage can change all of that!

Home Repairs:
Many reverse mortgage borrowers turn to a reverse mortgage to help pay for home repairs. Virginia M., a 70 year-old widow, needed a new roof and a complete interior and exterior painting. Her homes kitchen and bathroom fixtures all had to be replaced and the carpeting was worn. She obtained a reverse mortgage and used approximately $25,000 of the proceeds to help pay for the repairs, and still had enough money left over to increase her income by more than 40 percent. As a result, she is now able to live comfortably in her newly remodeled home.

Another widow in her late 70s lived in a small one-bedroom home that was valued at $70,000. She had started an interior renovation project but ran out of funds and needed more than $27,000 for completion. With the home remodeling finished, she can now get along comfortably on her small pension and Social Security income.

Pay Off of Existing Mortgage:
Many people take out 30-year loans for new homes after reaching age 50. Trying to make a mortgage payment of even $300 to $500 per month on a fixed retirement income is a burden for many seniors.

For many, a reverse mortgage can provide enough funds to pay off an existing mortgage and free up additional cash for the homeowner. For example, Dave C., a semi-retired 66-year-old professional who works part-time in commercial real estate, took advantage of a reverse mortgage and paid off his mortgage. Dropping his $1,200 monthly mortgage payment has made a tremendous difference in his quality of life.

Extra Money:
Trudy, a very active 75 year-old widow, informed her Seattle Mortgage Co. Reverse Mortgage Specialist that while she lived in a very nice home and had ample income to meet all of her daily needs, she was simply not going to pass up another opportunity to take a trip. Her best friend and several others were taking a cruise through the Panama Canal from Florida to Los Angeles and she hated to have to say no. We were able to set up a substantial line of credit for her at closing to pay for her trip, and she had a wonderful time!

Another couple, Jim and Gloria (both in their mid 70s) had built a very nice brick home for themselves more than 30 years ago. Jim had laid every brick in the home, and had done most of the other work as well. More than anything, he wanted to replace their 25-year-old truck. They wanted to haul their 5th wheel RV trailer around the USA and see it all. With their reverse mortgage they were able to buy a brand new, fully loaded truck. Jim and Gloria hit the road in style and in safety.

Helping Relatives:
Our clients often want to help their children or grandchildren. One client wanted to help her newly divorced daughter buy a condominium near her home. By taking out a reverse mortgage, she was able to give her daughter the down payment. A fringe benefit of this is that she will now get to see her grandson more frequently since they live so close by.

Many clients choose to use a portion of their funds to help their college-aged children with tuition and books.

Spouse in Nursing Home:
Nellie T., a spry woman in her late 70s, came to Seattle Mortgage with a difficult problem. She was no longer able to take care of her husband as he had had a stroke a little over a year ago. She had recently placed her husband in a nursing home facility so that he could get the kind of care that he needed. Using the proceeds of her reverse mortgage, she is able to provide for her husbands care with a steady cash flow for several years to come.

In-Home Care:
Carl S. is under the care of a professional guardianship service. He has to have someone living with him around the clock for assistance. Because Carl is in his late eighties, he was able to receive enough money from his reverse mortgage to pay for care as long as he lives in the home.

Another client used the reverse mortgage to make his home more wheelchair-friendly and to provide enough funds to provide in-home care for his wife, who has Alzheimers. He was able to keep his wife in the home for many years before she passed away.

Property Taxes:
The tremendous increases in home values in some parts of the country have led to massive property tax increases. Until recently, many seniors simply could not afford to pay their taxes and were forced to sell their homes. Now, with the help of a reverse mortgage, the additional funds help cover those costs.

One example is a client named Susan. Susan and husband (now deceased), who had been a Boeing engineer, originally paid $40,000 for their home. The home is now valued at close to $2,000,000. Susan, in her mid-seventies, wished to stay in her home for at least another five years. With the reverse mortgage, she was able to pay her property taxes while maintaining her quality of life.

Buying That Retirement Home:
One of our clients, Kathryn S., has taken out two FHA Reverse Mortgages. The first was on her long-time residence that she had built with her husband. The second was after her husband passed away and she moved into her retirement community condominium.

We received a call from Kathryn stating that she had a friend that wished to move into her retirement community, and asked if we could help. Eunice, Kathryns friend, had around $50,000 in savings.

There was a unit for sale in Kathryns community and Eunice made an offer on the property subject to her obtaining a Reverse Mortgage. She offered $90,000 for the property with the hopes of the appraisal coming in higher. The actual appraisal came in at $100,000 enabling Eunice to get approximately $50,000 from the reverse mortgage, and she paid the difference using the proceeds of the sale of her original home.

Saving a Family Home from Foreclosure:
Chris and Annie P. have been together since 1946. After venturing into the restaurant business, they decided to launch a new business producing and selling rice pudding made from an old Greek family recipe. For 16 years, the business supported three families, experiencing much success and growth.

Then, the business began to struggle. To overcome significant debt, Chris and Annie signed a loan to restructure the loans. However, when Chris and Annie could no longer make the loan payments, the business was shut down. The loan they had taken out included a substantial balloon payment, and they risked losing their home.

The combination of a sale of the business assets, the proceeds of a reverse mortgage on their home and donations from the community enabled the debt to be repaid. Their home was no longer at risk of foreclosure. In early 2001, the couple hosted a mortgage burning ceremony for everyone that helped them keep their home.