In an actual transaction a client obtained a Reverse Mortgage to complete a home purchase transaction. Here is the scenario: Senior parents own their home free and clear. The parents would like to stay in their home and be independent through their retirement. They however need some assistance occasionally now and feel they may need more care assistance in the future as they age.
A home in the parents neighborhood came up for sale. There daughter and son-in-law have interest in moving to this home and providing their parents with support. The problem is that the adult children do not have enough equity in their home to make the purchase without increasing their own house payment beyond what they could personally afford.
A solution is possible through a Reverse Mortgage. In this case the parents obtained a Reverse Mortgage on their home and was able to pull $225,000 cash equity. They still do not have a house payment because of the Reverse Mortgage. They then purchased the new home with their adult children,using $200,000 of these funds as a down payment on the new home after setting aside $25,000 to complete some home repairs. With the adult childrens remaining equity, after they sold their home, there was no house payment on either home.
The daughter now works part time and has the free time to help her parents. The parents still have no house payments and have the security of family in their neighborhood.
For more information on Reverse Mortgages and helpful links, go to www.CWMReverse.com