After your husband died several years ago, you had been strongly considering selling your home. After retiring from your position as executive assistant, you contemplated living in a retirement community. Since then, you’ve changed the direction of your planning. With your mother intending to move back to the Midwest, you’re considering a different plan, namely building an addition onto your existing home to create a separate apartment for her. Fortunately, there is sufficient space on the property to accommodate such an addition, with a separate entrance for her, yet with access to the downstairs of your own living quarters. You’ve spent the last six months getting proposals from builders, even researching the zoning laws.
Your mom has offered to help pay for the renovations, but, while you will allow her to contribute to the upkeep of the home, you know her finances are not set up for a large lump sum commitment. You’ve been considering different options for financing the structural addition and the furnishing of the apartment, perhaps cashing in some investments and taking out a second mortgage (your first mortgage will be paid off next year).
You’re certainly not alone in exploring multi-generational living. According to the Pew Research Center, 20% of the US population shares their homes with another generation. But, instead of a second mortgage, you might consider tapping into your home equity in a different way, using a reverse mortgage. Using the proceeds of the loan, you might not need to cash in investment assets, especially since Mom will be helping with your everyday household expenses going forward. With an FHA-insured HECM Adjustable Rate Loan line of credit, you’ll be able to draw the amount needed to finance each stage of the work. You’ll continue to pay real estate taxes and insurance (on the newly appraised value of the home, of course), but there will no longer be a monthly payment due.
A reverse mortgage might prove to be the key for creating the perfect new home for Mom.
David Garrison
Home Equity Retirement Specialist
NMLS # 1595194
Serving the State of Indiana
p (317) 644-2595 c (765) 516-0130
e [email protected]
2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894