By: John Krajsa
AFC Reverse Mortgage
A husband and wife were having a difficult time making an $800 payment on a $90,000 mortgage and were not having success in looking for a less costly alternative place to live. They also would prefer to remain in the home where they had raised their family.
Real estate taxes and homeowner insurance totaled about $6,000 per year, which meant that the carrying cost of staying in the home (other than the mortgage payment) was a relatively modest $500 per month ($6000/12) plus utilities and repairs. It was the $800 mortgage payment that was breaking the family budget.
The house had a new roof, vinyl replacement windows and a recently replaced heating system, so the likelihood of significant repairs in the near future that would not be covered by insurance was very low.
One of the options they considered was staying in their home with a reverse mortgage. After speaking with John Krajsa of AFC Reverse Mortgage, the couple learned that they qualified for a $125,000 FHA insured Home Equity Conversion Mortgage (HECM) – Reverse Mortgage – which was more than enough to pay off their existing mortgage and eliminate their mortgage payment. The remaining $35,000 from the reverse mortgage would be available for future use.
The Annual Percentage Rate (APR) of about 6.1% on their fixed rate HECM also meant that the cost of their reverse mortgage was not out of line.
With that mortgage payment gone, staying in their home with that $500 carrying cost was a very attractive option. With a reverse mortgage, staying in their home was not only their preferred option, it was their best option.
At the conclusion of the closing on their reverse mortgage, the husband remarked with a big smile, “Now we know where we will be living for a while: right here.”
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