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Scenario Examples

Whether you’re seeking to eliminate monthly mortgage payments, fund home renovations, or simply improve your financial flexibility in retirement, a reverse mortgage can be a valuable tool. Below, we’ve illustrated some real-life example scenarios (with hypothetical figures) to show how seniors can benefit from this financial solution

Senior Couple Walking Through Sand Dunes On Winter Beach

Scenario 1: Eliminating Monthly Mortgage Payments

  • John Bosworth, Age 68
  • Home Value - $250,000
  • Home Equity - $210,000
  • Approximate Mortgage Balance - $40,000

The Details:

John is a widower who lives at home alone in Caldwell, Idaho. He would like to stay in his home but is having trouble making payments and meeting expenses. His monthly mortgage payment is $611. Even with both Social Security income and pension, he is still short by $187 per month.

The Solution:

John takes out a Reverse Mortgage for $142,496. The proceeds pay off his existing mortgage so he no longer has a monthly payment and the remaining proceeds he keeps in an interest-bearing growth line of credit. These funds are available whenever he chooses to take them. Without the mortgage payment every month and with his interest earning growth line of credit in place it is smooth sailing for John.

Scenario 2: Funding Home Renovations 

  • Craig Jenkins, age 82, and Sylvia Jenkins, age 79 (Reverse Mortgages are calculated using the age of the youngest home owner.)
  • Home Value - $375,000
  • Home Equity - $375,000

The Details:

Craig and Sylvia own their ranch style home in Meridian, Idaho, outright.  Their monthly cost of living includes medical charges for an ongoing illness. They realize their income needs bolstering and want to access a portion of their home equity without creating a monthly payment.

The Solution:

By taking out a reverse mortgage on their home they are able to create a monthly recurring income for life that meets their needs in every way.  They can at anytime take all of their proceeds instead of a monthly payout which gives them peace of mind.
shutterstock_446506594 (1)

Scenario 3 - Down Payment Funds Solution

  • Steve and Mary Appleton, ages 75 and 76
  • Reverse Mortgage for Purchase Price of $650,000
  • Down payment funds from reverse mortgage

The Details:

The Appleton's have found their dream retirement home with a small amount of acreage in Kalispell, Montana.  They have sold their large California home where they raised their family and did not want to use all of the sale proceeds to purchase their new residence.

The Solution:

A reverse mortgage for purchase enables them to make a sizeable down payment of $255,706 on the purchase of $650,000 giving them flexibility by not using all of their sale proceeds.  They have money in the bank after the purchase of the new home and look forward to enjoying the Montana mountain views.

Scenario 4 - Bridging Gap for Social Security Payments

  • Mark and Lisa Wunder, ages 65 and 62
  • Seeking an early retirement
  • Bridging the age gap for Social Security payouts

The Details:

Mark and Lisa desire to retire early from their current employment careers.  They want the opportunity to have free time together to travel and make use of their motorhome while creating a photo travel guide. They own their home and feel the wanderlust to go and enjoy life.

The Solution:

A reverse mortgage loan can strategically assist the retiree by bridging the gap using the HECM proceeds to cover living expenses while delaying Social Security benefits until age 70.  Once 70 years old the benefits are a 76% higher payout compared to age 62. The reverse mortgage will be playing a pivotal role in their dream to hit the road. It will also create a safety net by establishing a HECM line of credit for unplanned expenses without dipping into Social Security benefits.
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NMLS#200821/#1824975
CA DBO License #60DBO 97824
ID License MBL #2081824975
MT License #1824975
OR License ML #5787
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Contact Us

Covenant Reverse Mortgage, LLC
211 E Logan Street,
Suite B-3
Caldwell, ID 83605
Number:
Main: (208) 454-1155
Toll Free: (888) 742-3439
Hours:
MON-FRI 7AM - 4PM

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This material is not from HUD or FHA and has not been approved by HUD or a government agency.
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When the loan is due and payable, some or all of the equity in the property that is the subject of the reverse mortgage no longer belongs to borrowers, who may need to sell the home or otherwise repay the loan with interest from other proceeds. The lender may charge an origination fee, mortgage insurance premium, closing costs and servicing fees (added to the balance of the loan). The balance of the loan grows over time and the lender charges interest on the balance. Borrowers are responsible for paying property taxes, homeowner’s insurance, maintenance, and related taxes (which may be substantial). We do not establish an escrow account for disbursements of these payments. A set-aside account can be set up to pay taxes and insurance and may be required in some cases. Borrowers must occupy home as their primary residence and pay for ongoing maintenance; otherwise the loan becomes due and payable. The loan also becomes due and payable (and the property may be subject to a tax lien, other encumbrance, or foreclosure) when the last borrower, or eligible non-borrowing surviving spouse, dies, sells the home, permanently moves out, defaults on taxes, insurance payments, or maintenance, or does not otherwise comply with the loan terms. Interest is not tax-deductible until the loan is partially or fully repaid.
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