Reverse  Mortgage  Purchase

Reverse Mortgage Purchase

Sep 05, 2015

Downsizing for Retirement

The recent Case Study below is about a client that we were able to help achieve her goals for retirement through implementing the use of the FHA insured reverse mortgage program. Many people are unaware of how a reverse mortgage can be used to purchase a new home rather than being used to stay in their present home. Such is the case with the beginning of this story. It is the end of the story that makes this such a great example of a Reverse Mortgage success.

Kathy was a client that I have known for many years. I have helped her and various other members of her family to purchase and refinance many homes and investment properties over the years. But this time it was different.

The idea

Kathy called inquiring about how she could possibly qualify to downsize to a less expensive home in anticipation of retirement. She was not quite ready for retirement but was anticipating doing so in the coming years. She had recently changed jobs and she was no longer comfortable with the idea of keeping up mortgage payments on her North Orange County home.

The idea was to sell her present home and purchase a less expensive home with a smaller mortgage or none at all. She had a first mortgage of about $330,000 and a second mortgage of about $72,000. She had already secured a buyer who would pay her approximately $750,000 for the property. After all the expenses of sale were paid, Kathy was going to net about $310,000.

The problem

There were actually two problems standing between Kathy and her goals. The first was that with only $310,000 to purchase a new home her choices were very limited or almost impossible in Orange County. That amount of money would only buy a condominium in Orange County. She was accustomed to a single family home and wanted room for visiting family members.

The second problem was that she didn’t want a mortgage payment. Although she was still working, she wanted her earnings to be used to build her savings for retirement.

The solution

After an initial meeting I suggested the FHA Reverse Mortgage Purchase program for Kathy. She was completely unaware of how we could use this method to purchase a home. Her Realtor had never heard of the program either. After another meeting with her and her Realtor we were able to give her a loan pre-approval based on this little known program. We explained that based on her particular qualifying situation she could buy a home with about 45% down and put have no monthly mortgage payment as long as she remained in the home and paid the taxes and insurance.

The result

Kathy was able to find a $482,000 single family home and put $232,000 as a down payment.* This new home required no monthly mortgage payments at all. She was able to then use the other $78,000 from the sale of her home to pay off all of her other debts. We also helped Kathy understand how to transfer her low proposition 13 taxes from her previous home to her new one.

The bottom line

Our client was able to remain in a single family home, do so without any new mortgage payment, retain her old super low property tax basis and prepare herself for a much more comfortable retirement. We were able to work closely with her Realtor, the listing Realtor and her financial planner to understand how this could be achieved and how it was a win-win for all concerned. Then we followed through and executed the plan. Another great result accomplished by careful planning and a coordinated effort.

*Each borrower’s qualification and potential loan amount is based on his or her age, income and financial capacity. The numbers illustrated above are not the same for each scenario and cannot be relied upon in your own situation.

Howard Platte

Howard Platte is a contributing writer and veteran of over 30 years in the mortgage business. He is recognized as an expert on Reverse Mortgage Financing as well as traditional mortgage financing. He can be reached at his offices at Golden Empire Mortgage 714.572.0727.

Latest News

Isolate Pure CBD

Health & Wellness Sorbet Mag

Isolate  Pure CBD

Bringing a Different Kind of CBD Company to Consumers An exciting new CBD company has emerged, capturing marke...

Staying on Trac with Body Flex Sports

Health & Wellness Jody Robinson

Staying on Trac with  Body Flex Sports

It isn’t often that a series of decisions made over a cup of coffee end up working out for the best: or becom...

Bare Bunny Aesthetics

Health & Wellness Jody Robinson

Bare Bunny Aesthetics

Baring Your Best Self with Surf City’s Newest Wellness Spa There is much to be said for feeling divine. The ...

What to Do When You Hear the Life-Changing Words, “You Have Cancer”

Health & Wellness Wade Smith, M.D.

What to Do When You Hear the Life-Changing Words, “You Have Cancer”

As a medical oncologist, I understand the toll a cancer diagnosis takes on patients and their families and I kn...

Hide and Seek

Finance Donald A. Hunsberger

Hide and Seek

Observations on How People Store Their Planning Papers Every estate attorney has heard the story recited in he...

Why older adults should review their medications

Health & Wellness Sorbet Mag

Why older adults should review their medications

St Joseph Hoag Health is here to help You know the routine: Step 1: Get your prescription from your physician...

Away at College Redux

Education Donald A. Hunsberger

Away at College  Redux

Decades ago we published a piece warning parents sending their kids to college for the first time to provide th...

Loaded Inheritance: Safe Gun Storage, Ownership and Disposal with California Gun Services

Business Showcase Ann Laurence

Loaded Inheritance: Safe Gun Storage, Ownership and Disposal with California  Gun Services

My grandparents owned a beautiful three bedroom casita in Solana Beach. Just up the road from the train station...

Greetings from Family-Friendly Fun Island-Style

Travel Jody Robinson

Greetings from Family-Friendly Fun Island-Style

Each year in Hawaii as the winter temperatures drop to a lovely 81 degrees, the groundswell charges the shores ...

Visiting (like) Royalty in the Queen City Charlotte North Carolina

Travel Jody Robinson

Visiting (like) Royalty  in the Queen City Charlotte  North Carolina

My entire experience with North Carolina up until a few months ago consisted of a vague knowledge of the sports...

The Proof is in the Paint with

Business Showcase Jody Robinson

The Proof is in the Paint with

But unfortunately phrases like “bottom-line oriented,” “unscrupulous,” even “cutthroat” have croppe...

Travel Can Be Tough on Your Legs

Health & Wellness Livia De Los Rios

Travel Can Be Tough on Your Legs

Medical compression stockings and socks are a travel essential Many people travel long distances and have to r...

Sorbet Magazine Celebrates Its September Issue!

Business Showcase Sorbet Mag

Sorbet Magazine Celebrates  Its September Issue!

It’s impossible to say what we love most about our issue release parties, especially the most recent one at V...

The Escher String Quartet Opens Segerstrom Center’s 2018-2019 Chamber Music Series

Entertainment Sorbet Mag

The Escher  String Quartet  Opens  Segerstrom Center’s 2018-2019  Chamber Music Series

Thursday, November 1, 2018 in Samueli Theater Segerstrom Center for the Arts launches its 2018-2019 Chamber Se...

Segerstrom Center Kicks Off Its 2018-2019 Jazz Season With Jazz Master Ahmad Jamal

Entertainment Sorbet Mag

Segerstrom Center Kicks Off Its  2018-2019  Jazz Season  With Jazz Master Ahmad Jamal

Segerstrom Center for the Arts presents Grammy® Award Lifetime Achievement Award Winner Ahmad Jamal for one pe...

Beyond the Books Nadia Milner delivers "Top Notch Services"

Entertainment Jody Robinson

Beyond the Books  Nadia Milner delivers "Top Notch Services"

I remember when one of my college friends was appointed Payroll Specialist for a large company in Pasadena. Whe...

Ready for Open Enrollment?

Health & Wellness Sorbet Mag

Ready for  Open Enrollment?

In a few weeks, you’ll be making important choices about next year’s health plan. As you consider your opti...

Making Educated Choices for Your Loved One’s Care

Education Jody Robinson

Making Educated Choices for Your Loved One’s Care

A Q & A with Derek Mannion, founder of Alliance Eldercare You think it might be time to consider options f...

Lea Michele and Darren Criss Continue LM/DC Tour With North American West Coast Dates

Entertainment Sorbet Mag

Lea Michele  and  Darren Criss  Continue LM/DC Tour With North American West Coast Dates

November 2, 2018  in Segerstrom Hall Following the demand of fans and rave reviews, actors and musicians ...

Drug Free, Surgery Free & Needle Free: A New, Proven Treatment to Reverse Erectile Dysfunction

Health & Wellness Jody Robinson

Drug Free, Surgery Free & Needle Free:  A New, Proven Treatment to Reverse Erectile Dysfunction

A Q & A with Dr. Michael DeYoung, M.D., LaSara Medical Group Men with erectile dysfunction (ED) often suff...