You’re happily retired in a community that boasts an HOA to provide maintenance and services. The monthly dues are baked into your financial plan. That is, until the notice of an upcoming special assessment arrives.
Our team recently received a call from a friend whose mother, at age 79, still carrying a small mortgage and living on a fixed income is now facing the challenge of a large special assessment. A comprehensive Condo complex update will take her HOA fees from $426 per month to $930, for twenty years at an interest rate of 8.75%.
She is grappling with the deeply rooted need to pay off her mortgage and now must factor in an additional $504 per month.
Separating the Home from the Cost
Helping retired borrowers work through solutions to create a lasting plan to stay in their home for as long as they choose is what our team does. The cost of maintaining a home has changed and the mentality surrounding how that is funded is changing.
What is the value in paying off your home if you then, can’t afford to live in it? Swing in a new concept, let your home pay for itself in retirement by safely accessing a portion of home equity with a Home Equity Conversion Mortgage making monthly payments optional and establishing a growing line of credit. Let the home pay its own maintenance.
About the HECM
The federally insured HECM, originally introduced by the department of Housing and Urban Development (HUD) is a government insured mortgage loan available only through an FHA approved lender designed specifically for homeowners aged 62+ to safely do just what our friend has accomplished, use a lifetime of savings locked up in home equity as an additional financial resource in retirement. What’s crazy, this isn’t a “new loan”. What is new are the updated consumer protections, the growing awareness of its incredible value as a financial tool, and letting go of the myth that a home should be owned free and clear tying up funds that could enable a better quality of life.
Happily Ever After
In the above scenario, our friend’s mother can:
- eliminate her existing mortgage
- create a growing line of credit for future needs
- extinguish the full $55K special HOA assessment within 24 months
- leave a significant portion of her equity untouched
- enjoy continued appreciation on her home at full market value
- remain the sole person on title and sell her home unencumbered by a daunting $930 per month HOA fee at anytime
- retain full proceeds, like any mortgage, to keep or pass on to her heirs upon selling her home
Independence
The HECM was the missing puzzle piece. Our friend, and his siblings are elated their mom has a financial solution providing her full control of her assets. She is not dependent on them to supplement this unexpected expense and is now positioned to manage future financial surprise. She has a back-up line of credit requiring no mandatory repayment until her home is sold.
Please Learn More
I’m a little passionate about these as you can tell. I watch how they change lives. Reach out to me or another Retirement Mortgage Specialist and get educated to assist continued home ownership well into retirement.
written by Sheila Landis for The Landis Group
