Challenges and Solutions

Challenge #1: Paying off existing mortgage

John is a widower who lives at home alone. He would like to keep his home, but is having trouble making payments and meeting expenses. His monthly mortgage payment is $611. Even with both Social Security income and pension, he is still short by $187 per month after other expenses

  • John, Age 68
  • Home Value – $250,000
  • Home Equity – $210,000
  • Approximate Mortgage Balance – $40,000

The Solution:

John takes out an initial reverse mortgage for $51,673. He takes a lump sum of $40,000 and applies it to his existing mortgage and the balance in lifetime monthly payments of $326.09. After paying the mortgage off entirely, John’s monthly income rises to $938. That’s $611 per month for the mortgage payment, plus another $326.09 from the reverse mortgage.

Challenge #2: Help with increased medical costs

Craig and Sylvia both take medication to stay in good health. The cost of monthly meds and treatments makes it difficult for them to find the money needed to maintain the quality of life they once enjoyed.

  • Craig, Age 82, and Sylvia, Age 79 (Reverse Mortgages are calculated using the age of the youngest home owner.)
  • Home Value – $375,000
  • Home Equity – $375,000

The Solution:

They take out a reverse mortgage with the option of either one lump sum totaling $120,825, or a monthly income of $1,,175. The extra cash flow from their reverse mortgage more than covers their monthly cost for medication, and allows Craig and Sylvia more freedom with much less stress.



Challenge #3: Traveling in Retirement

Kathy and Rinaldi would like to spend their retirement traveling around the U.S. in their RV, but don’t have extra money they would need to help pay for rising gas prices, repairs on the RV, and other added travel expenses.

  • Kathy, Age 63, and Rinaldi, Age 71 (reverse mortgages are calculated using the age of the youngest home owner.)
  • Home Value – $310,000
  • Home Equity – $310,000

The Solution:

They decide to utilize the Line of Credit Reverse Mortgage of $114,227. They request an upfront draw of $20,000 to do RV repairs and leave the remaining $94,227 in a growing line of credit they may draw from at any time, and more than supplements their need for gas and travel expenses.

Challenge #4:

Gordon and Joanne have no real debts, and their monthly income is adequate for them to live life as planned, but they would like to help out with the cost of college tuition for a grand child. For that, their income monthly and savings do not suffice.

  • Gordon, Age 62, and Joanne, Age 65 (reverse mortgages are calculated using the age of the youngest home owner.)
  • Home Value – $850,000
  • Home Equity – $726,525 (this is the 2019 maximum claim amount for Reverse Mortgages)

The Solution:

Gordon and Joanne take out a tax free* reverse mortgage credit line allowing up to $258,390. Each grandparent can now bestow a monetary gift to the grandchild, the amount being that which is currently allowed by law, based on current IRS tax laws for family gifts.


*Be sure to check with your accountant to verify current tax laws.

Note 1: Reverse mortgage proceeds are based upon the current interest rates at the time the loan closes, the age of the youngest borrower, and the equity in the home. The examples above are based on an estimated interest rate of 4.68% for the lump sum and an estimated ARM of 4.689% initial rate for the line of credit.

Note 2: Borrowers can lock rates in for 60 days from the date of approval. Published rates adjust weekly, and the rate for closing is determined by the weekly rate set on Tuesdays of each week (excluding Federal Holidays) and stay valid until the following Monday.