Reverse mortgage, home improvements set up retirement

FHA home equity conversion mortgage unused credit lines automatically increase each year, providing even more available cash flow in future years.

Loan officer: John Holmgren, Holmgren & Associates. Property: Single-family home in Maxwell Park district of Oakland.

Property value: $610,000. Loan type: FHA home equity conversion mortgage (reverse mortgage).

Rate: 5.022 percent, annually adjustable

Backstory: The complexity of reverse mortgages produces many questions. As a result, homeowners often appreciate a local lending source that can make sure that the reverse mortgage is a suitable financial vehicle for them and the property, allowing a smooth loan process.

In this case, my client had purchased her home with her ex-husband many years ago. She retained the home when they split up and, because his income was no longer contributing to the housing cost, had taken in a renter in her twobedroom home.

She was employed as a music teacher and performer, and had reached the point that she wanted to reduce her music commitments.

Along with the knowledge that her cash flow was going to be reduced, there were also a number of major home improvement projects that she knew she needed to be done if she was going to stay in there long-term.

However, she lacked the funds to pay for these projects. Unlike many people I work with, she planned ahead and looked into her financial options before the situation developed into a difficult one.

Using an FHA-insured annual adjustable reverse mortgage, we were able to solve many problems at once.

We eliminated her mortgage payment, took out funds to pay for a new roof and exterior paint, and set up a credit line that can be used to supplement her cash flow. FHA home equity conversion mortgage unused credit lines automatically increase each year, providing even more available cash flow in future years.

The homeowner had been talking to an out-of-area reverse mortgage provider that typically handles everything on the phone, like most reverse mortgage lenders.

In this case I visited the home, advised her on some home repairs and other steps that would need to be taken to meet FHA requirements, and recommended a good local roofing company to replace her roof.