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The Future of Reverse Mortgages — Here’s Dorothy’s Success Story

Mary Jo Lafaye 

Reverse Mortgage Specialist | Helping Homeowners 55+ Unlock Retirement Income | Trusted Advisor to Financial & Legal Pros | Speaker & Educator

Dorothy* was happy and secure and loving her busy married life in Marin County. She married her college sweetheart David and they were still a perfect match 46 years later. They raised four children together and enjoyed all the same things: playing tennis, traveling to Europe twice a year and having dinner parties with friends. She was already making plans for their golden wedding anniversary party.

So Dorothy was devastated when her husband came home from golf one day and asked for a divorce. He had met someone new and wanted to move out of the country.

Suddenly, she was single at age 72. More than anything, Dorothy wanted to stay in the home where she raised her children, and keep living in her community with her neighbors, church and friends.

But how? She hadn’t worked in decades and she didn’t have enough income to cover her living expenses, and pay for property taxes, insurance and maintenance on the aging house.

Exploring the New Reverse Mortgages

Dorothy’s financial advisor suggested she look into options with reverse mortgages. He explained that the old “reverse annuity mortgages” of the 1980s weren’t really mortgages at all. They were an insurance product that consisted of a high-interest loan, a forced annuity purchase — and the insurance company lender got 50 percent of the borrower’s home appreciation! Those aren’t around any more.

Today’s new FHA-backed reverse mortgages are flexible options designed to help older homeowners like Dorothy have a secure retirement by using some of the equity from her home for living and healthcare expenses.

Dorothy’s home appraised at $1.2 million. I talked to Dorothy about all the different options and she decided to go with a Jumbo Homesafe mortgage, a proprietary mortgage from my company, Retirement Funding Solutions. It’s designed for homes worth $850,000 or more and she closed at a rate of 5.99%.

She took out $444,000 in equity, and used $400,000 to buy out her husband’s half of the home. She used the remaining $44,000 to pay for needed home repairs and add to her nest egg.

She got to keep her home — and her low property tax rate under Proposition 13.

And Dorothy doesn’t have to make any monthly mortgage payments,** as long as she stays in her home and pays all the property tax, insurance and maintenance costs. If she decides to sell her home in 10 years at age 82, the debt will be $820,000. On the up side, even if her home appreciates just 4 percent a year, her net equity will be $200,000 higher than it was when she took out her original Jumbo Homesafe loan.

And her half of the couple’s investment portfolio goes to maintaining the lifestyle she had before her divorce. She had so much extra space at home, a friend moved in with her, and that rental income pays for expenses like homeowners insurance and utilities. These days, Dorothy is creating her new life and feeling like her financial future is golden, all on her own.

To hear more of my client success stories and learn about using your home equity for retirement, call me today at 415-259-4979 or email [email protected]  NMLS #246222

*Not her real name.

**Reverse mortgage 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.  

Mary Jo Lafaye, NMLS ID 246222. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Licensed by the Department of Financial Protection & Innovation under the California Residential Mortgage Lending Act, License 4131356. 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.org

Equal Housing Lender