September 10, 2009

Reverse Mortgage

danHow a reverse mortgage can keep you from running out of “rent money” while enjoying comfortable senior housing.

By Dan Dolan
Dan Dolan Homes

In light of the economic turmoil of recent months, I have received many more inquiries from seniors trying to evaluate their independent living options. More specifically they want to know “how to keep from running out of money” when providing for their housing needs. It’s a big issue.

The scenario that I hear most often is that a couple or single decides to sell the existing home because it no longer meets their needs. Too many stairs. Too far out in the country. Needs too much updating to be comfortable. Not energy efficient. Not close enough to relatives. Laundry in the basement. So the house is sold. The proceeds may be $100,000 or so. The question becomes what kind of housing to move to while insuring that the money doesn’t run out.

Seniors prefer to “Age in place.”
Industry research shows that some 80% of seniors would rather “age in place” in their own home rather than move into a large multi-story high-rise facility. One family indicated a facility they looked at wanted $4,000 a month rental. With a $100,000 nest egg they could live there for 25 months. But what to do after that? Other facilities were even more expensive and there was no assurance those rates wouldn’t go up over time. They didn’t know what they or their families would do when their money ran out. Equally important, they really preferred to stay in their own home.

Another inquirer was concerned with preservation of capital. They were apprehensive about possibly using up all their savings in retirement home costs thereby being unable to leave anything for their children or grandchildren.

No monthly mortgage payments
I mentioned an option to them that they felt makes sense. A local banker outlined it to me. The example he used with me centered around the purchase of a $200,000 home by the retiree with about $85,000 down and the use of a Reverse Mortgage for Purchase for the remaining funds. The down payment could come from any combination of savings or the proceeds from the sale of an existing home. In this example, after the down payment was made there would be no further monthly home mortgage payments for as long as the homeowner(s) lived in the home. None.

Since you own the home, the usual monthly operating costs would apply including real estate taxes of an estimated $250 a month plus utilities and the $65 a month lawn maintenance and snow removal fee. That’s it. Obviously, this example will vary depending upon actual mortgage rates at the time of closing; the price of the actual home selected and possible closing costs. But the point is, there’s no further monthly mortgage payment. Ever. Should one member of t he household pass on, the survivor remains in the home for as long as they like. Again, with no further mortgage payments. When the home is eventually sold, you or your heirs never owe more than the value of the home. You or your heirs receive any proceeds left over after the sale of the home and the payoff of the mortgage. That means you never “run out of money,” and you never have to worry about how to pay monthly mortgage or the rent as would be the case with a retirement home.

In-home services available
As for some of the services offered by the various retirement homes, local in-home services are readily available to fill the specific needs of the senior homebuyer. Many of these services are available through highly respected service providers such as the Visiting Nurses, Meals on Wheels, CASI and others. Some costs may even be covered by Medicare or insurance.

Dan Dolan Homes has been building homes in Eastern Iowa for the last fifteen years. Specializing in age-in-place design, which allows homeowners to live life to the fullest instead of worrying how they can make their homes accessible, as they grow older. Dan Dolan town homes offer features like extra-wide doorways, and no-step entryways. All of the town homes meet Energy Star certification, which promotes a healthy environment while saving energy costs every day.

Dan Dolan Homes also offer a wide range of standard and additional optional features such as push-button light switches, security systems, comfort toilets, step-in showers and a wide array of features to make home living and maintenance carefree. Security systems are also available to notify relatives or neighbors in t he event of an emergency. And, of course, we mow the lawn and shovel the snow!

…And it’s all on the ground floor
Forget about elevators, lugging groceries upstairs, outdoor parking away from your front door. All Dan Dolan town homes have a 2-car garage, main floor laundry, decks or screened porches if desired, park-like open views if preferred, extra storage space, multi TV and computer outlets, the exclusive insulated concrete Dan Dolan Silent Wall™ between units and a wide variety of color, flooring and kitchen options.
We take the “unknown” out of independent living while preserving senior wealth
With the economic environment so uncertain these days and with costs seeming to rise every month, with the help of a reverse mortgage we can help you to age in place within a housing cost structure that you can plan on up front with no ongoing surprises and little fear of “running out of money.” Visit one of our weekend open houses in Muscatine, Blue Grass, Davenport or LeClaire and talk with one of our Realtor consultants. Of course, you can always reach me for an individual consultation at 563-570-1460 or at our sales office 563-381-4088. And we are on the Web at