Bryan Smith

Certified Reverse Mortgage Professional

NMLS# 1490163

Bryanizm@yahoo.com

Bryan Smith Certified Reverse Mortgage Professional

Case Studies

Case study #1 – Relief and lifestyle

John (age 70) and his wife Mary (age 53) have a home valued at $750,000 and have an existing balance of $80,000. John gets a reverse mortgage in the amount of $415,000 as a line of credit. 80k is used to pay off the old loan and John takes another 75k at closing to pay off the family car and other debt. They now owe approximately 155K on the line of credit. The new required monthly payment on the 155K is ZERO. The borrower is only required to pay their taxes and insurance. The other unused portion of the line of credit ($260,000) remains as available funds for John to tap into later. If he does access this additional money later, the monthly required payment is still ZERO. While he can make payments if he wants to, he is not required to make any reverse mortgage debt service payments.

Now let’s look at what happens a few years down the road. John is 77 and has unfortunately passed away. His wife Mary was too young to be on the loan at the time the loan was taken out, so the unused or un-accessed portion of the line of credit will be frozen upon John’s death; however, she is not required to make monthly payments and will continue to have occupancy rights (the right to live in the home) for the rest of her live, as long as the property taxes and home owner’s insurance are paid and she continues to take good care of the property.