Being single, Tom knew what it was to struggle financially all his life, and at 62 with retirement around the corner, he was working on his plan which would enable him to retire at 65 and finally allow him to stop working. One of the best things he had ever done was to buy out his ex’s share of their current home at the time about 10 years ago. He had been faithfully paying his mortgage down aggressively year after year, both by taking shorter amortizations as well as putting down extra whenever he could. This left him little to live on, but he felt the sacrifice would be worth it, because three more years and it would be paid off. He juggled this as well as a small personal loan (which he had taken out to help his grown children), and some small balances on credit cards by tutoring students on the side, after his daily teaching job ended. His plan was to retire with a full pension, OAS & CPP, and with his mortgage paid off he would move into the basement suite (where her daughter & grand-daughter currently lived) and rent out the top floor of his house, providing him additional cash flow to further supplement his income. Everything was going according to plan until he suffered a damaging stroke, which forced him onto permanent disability. Unfortunately, because his benefits were taxable, his earnings were down considerably, which resulted in him struggling to stay on top of all his monthly obligations. He approached his bank to see what options they could provide, but now because of the lack of income, they couldn’t do much at all.
Believing there was little choice but to sell his current home and move, which would have forced not only him but his daughter & grand-daughter to move as well, he happened to hear about reverse mortgages from a former colleague. Within a very short time, he was approved and paid out not only his existing mortgage, personal loan, credit cards (which were now racked up) but was also able to leave $50,000 of his approved mortgage amount untapped, should he need it in the event of “a rainy day”. He continues to live comfortably due to the increased cash flow, waiting until his full retirement benefits kick in. If it hadn’t been for the reverse mortgage, he would have been forced to sell his home at the worst time. The reverse mortgage has given him the freedom now to sell on his own terms, when he’s ready!
Bob & Irene had been retired about 10 years and had come to realize these weren’t really their “Golden Years”. In fact, the only thing “golden” about them was their weekly visit to the “golden arches”. They had always prided themselves on being good parents, rarely saying no to any of their kids when they needed financial assistance. They didn’t really have any regrets about helping, after all their kids were all grown and had families of their own and doing well financially. But now in their 70’s, Bob & Irene were feeling the “pinch” financially, since both of them never had very high paying jobs during their working years. Retirement provided the basics financially: government pensions for both and a small private pension for Bob. All of this amounted to little more than $4,000 per month, not much to live on.
They had planned on selling their home when they retired and “cash out”, but realized that if they did and wanted to downsize, they would either have to move into a condo or move further away from their family. So they stayed put, but the expense of maintaining a home on limited budget had taken its toll, forcing them to take on additional credit card & personal debt, and having to attend a wedding and a funeral at the other end of the country didn’t help either. So they approached their bank. While they could be approved, what they could be approved for was not much due to their limited income, it would hardly give them enough of a cushion after paying out all of their existing debts. On top of that, they would have to start making payments. While this would be lower than what they were currently paying, it wouldn’t be enough. They had heard from a friend about reverse mortgages and decided to check it out, and after much investigating they decided to proceed. They really liked the idea of not having to make monthly payments if they didn’t want to. Due to their age and the type of property they owned, they were approved to take out up to 45% of its value. Since they didn’t need it all, they decided to only take 25% of their equity out. This was enough to pay off everything, put some away, do some needed repairs and still have enough left over for a vacation back East to visit their son & his family.
BOB & IRENE M.
Rose had been living in the same home her husband had built 40 years ago. When he passed 15 years ago, she told her daughters that the only way they were going to get her to move out, “was over her dead body”. Her whole life was tied to those 4 walls; she along with her husband had raised a family and built a life in that home. Now in her 80’s, she was beginning to have a multitude of health issues, both physically and mentally. The geriatric specialist encouraged her family to keep her in the home if at possible instead of moving her into a nursing home, thereby avoiding disrupting her life and routine. In order to do so, the family arranged both for outside care and assisted as well, and with her children living nearby they were able to take turns to help; but this was taking both an emotional and financial toll on the family. Rose’s life savings were quickly beginning to run out; not surprising between her care and the upkeep of the home, and at this pace there would be little left shortly.
The family approached a couple of banks and unfortunately the answer was the same. Due to their mom’s age & health and limited income, there was nothing that could be done, other than to sell the home and put her into care. They were at wits end, that was until their family attorney (who had arranged the power of attorney for the family) told her son, Adam, about reverse mortgages, which some of his other clients had taken advantage of. The family got the ball rolling and within a short period of time, a plan was put into place that allowed the family to receive $5,000 per month for Rose’s care tax free, for the next 7 years, due to the value of the property. This plan was structured in such a way that at the end of 7 years, Rose would still have about 45% of the equity in her property left, which would be sufficient to fund her remaining years in a full care facility.
THE WILSON FAMILY