50+ Lifestyles

Why seniors are “checking out” our claim they can live in a new Dan Dolan home for $900 a month

By Dan Dolan
Dan
Dolan Homes

Why seniors are “checking out” our claim they can live in a new Dan Dolan home for $900 a month. Seems “too good to be true” one visitor told me. But, it’s not!

One of the visitors to my “Meet the Builder” open house sessions a few weeks ago came in with his Social Security statements to show me his income. He receives $2036 a month, and his wife receives $846, for a total of $2882. “How can I pay over $3,000 a month at an independent living facility,” he asked me, “when that’s more than I receive, and that doesn’t even include medical, auto, clothing, hair care, entertainment, travel, etc.?” That’s just to name a few of his expenses. And he expects
that his monthly living costs will all go up faster than his income, thereby creating a growing deficit that he’ll have to cover somehow.

I had to agree with him. And in my view, I see costs continuing to rise. I’m afraid a lot of seniors are going to get blind-sided when it comes time for them to secure their senior living accommodations. For instance, many of the potential buyers that I see at my open houses have had a health “incident” that involves knees, backs, heart or some other medical condition which limits their life style. They must move from their existing homes with stairs and must now live all on one floor. Many can no longer maintain their lovely yard. Or, they can no longer deal with our winter snows. So, they explore the two obvious solutions: either moving to one of those new (and expensive) “retirement hotels” in the area or seeking out senior homes like mine.

When we talk about the cost of possible housing solutions, most seniors tell me that they can afford the estimated $900 or so monthly that it takes to live in one of our homes, when they finance their new homes using a Reverse Mortgage for Purchase. But for most of the people that I see, spending $3,000 a month or more at an independent living facility is something they
cannot or do not want to do. And at an annual cost of $36,000 a year or more, modest savings soon get dissipated.

When considering the Reverse Mortgage for Purchase, buyers recognize that an initial one-time down payment is needed. Most buyers use the equity in their existing home to do that. Many families that we see have lived in their homes for 25, 35 or 40 years or more. So their homes have appreciated over the years and now offer the equity needed for the Reverse Mortgage for purchase. So that’s a consideration. To illustrate the $900 a month living cost, here’s an example that I developed for a recent potential buyer age 75. Based on that age, the one-time down payment would be about 41 percent, or about $107,000, for the $260,000 home he was considering. The estimated monthly cost that we came up with was $888, and that covered real estate taxes, HOA, insurance, heating and cooling, water, sewage and trash pickup. This estimate can adjust up or down, depending on the age of the buyer and the price of the home being purchased. But for planning purposes, we believe that these estimates represent a useful illustration of what’s possible. To date, many buyers at several of our locations have used this form of financing. The major benefit that they cite is not having to make a monthly mortgage payment. This makes their financial planning easier and helps to conserve their cash to use elsewhere or to build up their investments or savings.

Once again, how a buyer finances their new Dan Dolan Home is strictly their call. We have no vested interest in how or whether a buyer either finances their home or elects to pay cash. But for those who elect to conserve their cash by limiting their monthly outlay, buyers tell me they like the Reverse mortgage for Purchase as an option. I might add that this program requires that the borrowers take a government-approved education session so there are no hidden surprises in the process, which buyers seem to appreciate.

The final point that I make to all the visitors at my open houses is that the best time to buy their senior housing was
yesterday. The next best time to do so is today. And if we discuss housing prices again next year, prices will likely have risen another 2 to 2.5 percent, and the “gap” between the proceeds from the existing home sale and the cost of the new home will have widened. Acting sooner rather than later will lower your senior housing cost.

Visit any of our Dan Dolan Homes locations in Davenport, Bettendorf, Pleasant Valley, Blue Grass, Muscatine or Clinton and let our Realtor host show you the range of homes we offer. Our locations are open weekends, or you can set up a private showing at your convenience. The back cover of this publication describes one of our latest offers. And we’re on the web
at www.dandolanhomes.com. Why not come out and see us this weekend.