FHA reverse mortgage program helps retiree stay home

Mortgage adviser: Dominique Stevens, Mayfair Mortgage Advisors.

Property type: Singlefamily home in San Francisco. Loan amount: $325,000. Loan type: Fixed at 3.310%. Loan terms: Reverse Home Equity Conversion.

Backstory: I was referred by one of my clients to a man who is preparing to retire from his job.

He had been weighing his financial options and needed guidance. He wanted to stay in his beloved neighborhood in Bayview, San Francisco; however, with a small mortgage to pay and the cost of living, he did not see that it would be feasible to stretch his retirement income to meet all his obligations. He had bought the home 25 years ago while it was very affordable to live in the Bayview.

We went over his financials to see if lowering his interest rate on his current mortgage would save him money. It would, but it was not enough to allow him to stay put comfortably.

We started looking at reverse mortgage options. By eliminating the mortgage payments on his primary residence, he could turn around and use his retirement funds for living expenses.

With the FHA HECM reverse mortgage solution, we were able to pay off his current mortgage, and obtain $50,000 cashout so that he had savings in reserve for a “rainy day fund.”

The FHA Reverse mortgage program is available to homeowners over the age of 62. They can live out their days in their own home, mortgage free. The loan protects their heirs, for the remaining equity is left to them. This program only requires that the homeowner occupy the property as their primary residence, make necessary repairs to the property and keep up with the property taxes and insurance.

As nontaxable income, the payout does not affect the borrower’s Medicare, Social Security or pension benefits.