While the original plan was, once you’d both retired, to put your home on the market and join several former neighbors at a nearby independent living retirement community, you’ve changed your minds and decided to stay put. Rather than waiting months for just the right spot in that community, then needing to expend much physical effort (and spend many dollars) on moving, you’re now planning to do an interior overhaul centered around the first floor kitchen and bath, turning what was the guest room into your own bedroom. That way, there will be no need to “downsize”, and you can continue to enjoy the furnishings and artwork you’ve so carefully selected and maintained over the years.
The snag is in the financing. Had you sold, the profit in today’s market would have more than covered the moving and redecorating costs as well as the retirement community “buy-in” fee. You’re reluctant to strip your cash savings and jointly held investment portfolio assets, and, with an excellent credit rating, are considering what your banker calls a cash-out refinance loan.
As you work towards preparing your home environment to be more age-friendly, you might check out contractors who are specifically trained to do “aging in place” home remodeling, certified through the National Association of Homebuilders. In terms of paying for the interior “overhaul”, consider tapping into the equity you’ve built up in your home through a reverse mortgage rather than a refinance.
With reverse mortgage funding, there will be no obligation to make regular monthly mortgage payments,* nor will you be forced to dip into your investment portfolio assets to pay for the home redesign. Your reverse “line of credit” will enable you to make tax-free** withdrawals as needed to pay the contractors as the work proceeds. Meanwhile, the unused portion of your equity will actually be growing (credited with the same rate of growth as the interest being charged on the borrowed funds).
Your reverse mortgage can help you stay rooted in the home you love, even as it gets a “facelift”.
*Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees. **Please consult a tax advisor. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.orgEqual Housing Lender