Nancy Lund and her husband retired from the hustle and bustle, the smog and the traffic of Los Angeles in 1975 and found exactly the community they sought in Greenville. Nancy, now 93 years old and a widow, opened her own home design business and was still drawing plans until last year. She is currently writing her memoirs– the ups and downs, the changes she has seen in a long life. As Chair of the Plumas County Commission on Aging she continues to be active in senior affairs and in the League of Women Voters. She may be reached at 284-7206 or at email@example.com
STAYING AT HOME
In 1975 my husband and I moved to this beautiful mountain community. Like many of you we chose it because it spoke to us of nature, of tranquility, of a chance to unwind after our years in the rush and hubbub of the city.
But then there comes a time when ill health or the loss of a partner catches up with us. Must we leave or is it possible to stay? Let me tell you about the solution that worked for me but may not be right for everyone.
In 2006, like all newly widowed persons, I was faced with many decisions. The most difficult one was whether there was a way that I could stay here where I had sunk my roots down, the place that I dearly loved. Like many widows, my income would now be quite a bit less. (And my daughter and family were living in the bay area and seemed anxious for me to move closer to them.)
What should I do? Ten years earlier my husband and I had attended an AARP meeting where we first heard about reverse mortgages. Intrigued, we sent for the AARP booklet on the subject and were reassured that it was not a scam. While there were many things that appealed to us, the up-front costs were quite steep so we didn’t pursue the matter any further.
Now I decided to investigate the subject again, And this time it was ‘a fit’ for me!
Be it noted : I am not a lawyer, nor an expert on mortgages! So what you read here are the factors that worked for me. You can decide if they apply to your situation.
Reverse mortgages are contracts and are in effect as long as you live, or until you move out. And although the bank, or lender, may change, the terms of the contract cannot be changed. You have a choice on how you will access the amount of your reverse mortgage: for a monthly stipend, in a lump sum or on as an equity account on which you can draw when needed.
The amount of money available is based on four main factors
1. What is the current appraised value of your home?
2. Is your home fully paid for or do you have a big mortgage?
3. Is your house in good condition or have you delayed getting those needed repairs?
4. What is your age?
You pay for the appraisal and it can’t be by your son-in-law or friendly neighbor! It must be current, made by an FMHA- approved appraiser. (Today’s falling housing market may make your house less valuable that you thought.)
If your home is not paid for, the reverse mortgage will pay off the loan, as well as paying off credit-card debt. But that, of course, reduces the funds available. (Happy to get those debts paid off at last!)
If the appraiser finds that repairs are needed – a new roof, termite or water damage or simply a new coat of paint – those need to be taken care of in a timely matter. And their cost is deducted from those funds. (Incidentally these improvements will make your house safer and more pleasant.)
Your age is very important because the amount of money available is determined by a percentage of your age. Example: House appraised at $200,000; your age 65—amount available: $130,000 (before deductions , if any.) Or, appraised value of $200,000; your age 89 – amount available: $178,000 (before deductions.)
I can’t say what the “closing costs” are, but they are less onerous than formerly. And there are monthly interest charges deducted, as well.
Luckily, all these factors worked well for me and I can spend my remaining years in the place I love. And my family and friends have a place to stay when they visit!
If your only asset is your home and leaving it to your kids is a top priority for you, then a reverse mortgage is not for you. In my case, my son will inherit the house –along with a hefty mortgage. But that is the way we both want it!