Things to Consider About Aging In Place

Seniors in home remodeling

Retrofit my Existing Home or Move?

Reprint from Article Written for The Union Grass Valley Newspaper on April 28, 2015

A recent survey by Genworth Financial, a long term care insurer, noted that while overall long term care costs continue to rise, paying for care services in home is still the cheapest option*. Being close allies here in Grass Valley with local and may I say, beautiful assisted living communities, aging in place in one’s home is not for everyone, the thought of having meals prepared by gourmet chefs and lots of activities to choose from is enticing indeed. However, some of my clients complete a reverse mortgage credit line to tap into their home equity for funds to retrofit their homes for the next stage of life’s journey.

What is the typical cost of a retrofit? The MetLife Report on Aging in Place 2.0** recently reported the cost for design and structural modifications for a one story home will cost an average of $9,000 to $12,000.

What are smaller projects to consider? Replacement hardware, sturdy handrails, grab bars, single handled faucets, higher sitting toilets, rollout shelving in kitchens, and lighting in hard to see spots are all relatively easy and cost conservative.

If I funds are available, larger projects for electric scooter or wheelchair access; widening doorways, corridors, and ramps are bigger picture retrofits.

In home health costs are reportedly rising at a slower pace than facility-based care. According to the Genworth study, in-home health aide costs rose approximately 1.27% over a one year period compared to assisted living and semi-private nursing home care rising an average of 2.86% and 3.77% respectively.

Seniors in home with in home care provider

There’s no pre-determined correct path in this next stage in a senior’s life, it’s all about hopefully having the financial ability to exercise a conscious choice. In addition to a reverse mortgage credit line being used to retrofit a senior’s existing home, a reverse mortgage can fund assisted living/dementia care for one owner on title, as long the other owner on title to the home remains in the home as their principle residence. Also, an existing home can be sold to buy, via reverse mortgage for purchase, an already senior retrofit home.

One of my clients commented recently that they felt I conducted my business more like a consultant, not only a loan officer: someone who would listen to concerns and offer options, this after we spent time going over their future living and financial considerations; preparing for big picture changes for them as they entered their mid-70’s. Aging is not for the faint of heart, we all are moving forward in the journey of maturing and entering into new life stages. If you’d like to sort through some of your options with me, call for a personal appointment or attend one of my monthly Reverse Mortgage Workshops held in my local Grass Valley Office, lunch is catered and the last comment from several of the April workshop group: ” Shawna, that was fun!”

A closing thought: the recent HUD reverse mortgage program change requiring me to do a borrower financial assessment at the time of loan application is no reason to allow any lender to panic or pressure you, give me a call, I’ve got you covered for explaining this change!

Shawna McDonald has successfully completed hundreds of reverse mortgages and is approved with 8 reverse mortgage lenders. Her office, Sierra Foothills Reverse Mortgage, is located at 412 E. Main Street Suite N, Grass Valley, (530) 497-3010. Her website is www.SierraFoothillsReverse.com.

The opinions expressed here are solely those of Shawna McDonald, Loan Officer/Real Estate Broker. Copyright © 2015. All Rights Reserved, duplication and distribution prohibited. Shawna McDonald NMLS #271335 CA-BRE # 00585530 DBA Sierra Foothills Reverse Mortgage and Borba Investments Inc, DBA MLS Reverse Mortgage Auburn, CA NMLS #76801 BRE #01456165 ~ HUD approved lender. * 2015 Genworth Financial annual Cost of Care Survey     ** MetLife Report on Aging in Place 2.0, 2013

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Reverse Mortgages Now Available for Home Purchases: What?! Purchasing a Home in Reverse??

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    Reverse Mortgages Now Available for Home Purchases ~No Income Qualifying, What’s Not to Love?

Realtors® and home buyers  62 years of age and older are excited about the no income qualifying reverse mortgage for purchase loan and how it expands home buying power,  while at the same time, how it increases the ability for folks to keep more of a nest egg from the sale of an existing home. This is a mouthful, so let’s look at an example:

Karen and Jim are retired 76 year olds. They sold their large home in a metropolitan area; the cost of upkeep had become a burden and they discovered an area they wanted to move to that they loved and had a lower cost of living. (Sound familiar?)

Originally, the three of us discussed doing a traditional reverse mortgage on their existing home whereby we would set up a reverse mortgage line of credit and they would draw funds for upkeep expenses. Ultimately they decided to sell the home and their net proceeds were $550,000. They then moved into a rented a home in their new area.

Once settled they contacted a local Realtor® and mortgage broker who advised them the typical cost of a home with the amenities they wanted would be $400,000, but that under current, loan rules, their retirement income would not quality them a traditional loan. It looked like they were going to have to pay all cash for this next home and paying all cash would only have left them with $150,000 from the sale of their old home, not as large a nest egg as they had hoped.

However, instead of paying all cash they obtained a reverse mortgage for purchase loan. Here is how the formula worked: on a home valued at $400,000, and at age 76,  they were eligible for a reverse mortgage of $224,000 and their down payment was $176,000. (A far cry from having to pay the all cash of amount of $400,000.)  With their Realtor’s assistance they made an offer to purchase a home for $400,000, contingent upon typical items such as an appraisal, property inspections and obtaining a reverse mortgage for purchase loan. The sale went through successfully.

Therefore, with a reverse mortgage for purchase loan, instead of having to pay all cash, they only made a down payment of approximately 44%, $176,000, and the remaining 56% of the sales price became the reverse mortgage loan of $224,000.

They are monthly mortgage payment free.

 THE BIG NEWS: instead of having a nest egg left over from the sale of their original home of $150,000 if they had paid, by doing the reverse mortgage for purchase, they instead have a nest egg remaining of $374,000.

 The home is titled just as with any home with a mortgage: Karen and Jim are the owners and the home can be sold by them or their heirs, the reverse mortgage paid off, and they or their heirs keep any remaining equity.

This is an exciting loan program, please feel free to call me, or have your Realtor® call me, if you would like me to run a qualifying scenario for you. FHA is the insurer of reverse mortgages and HUD makes and enforces the program the rules. HUD advises that some form of income qualifying for ALL reverse mortgage types will be put into place by May of 2014, thus to be able to bypass this impending new requirement think about starting your traditional reverse mortgage, or for purchase reverse mortgage now.

Shawna McDonald, Loan Officer has completed hundreds reverse mortgages.  Approved with 7 of the largest reverse mortgage lenders in the nation, she is an active listener who cares about her clients’ retirement goals. She can be reached at  530-497-3010.  Her local office, Sierra Foothills Reverse Mortgage, is located at 412 E. Main Street Suite N, Grass Valley, CA.  The website is www.SierraFoothillsReverse.com

NMLS #271335 BRE 00585530 Borba Investments, Auburn, CA NMLS #76801 HUD approved lender