Don and Darla were referred to me by a local bank here in Medford when they inquired about a reverse mortgage. Our first meeting lasted 2 hours. Our second meeting lasted 2 hours. Our third meeting lasted 2 hours. We had a total of 5 meetings, at 2 hours each, for a total of 10 hours before we actually started the application process.
I am sharing this because even though I think I am a pretty good salesman, you can’t sell a reverse mortgage. My job is to educate my clients, share as much information as they need and run as many scenarios as necessary, until they feel empowered and confident in making a decision. Sometimes this takes one meeting; sometimes it takes 5.
Now, let’s get back to Don and Darla.
For about the last 2 years, before coming to see me, Darla had been using credit cards and lines of credit to cover medical, medication and living expenses. Don was completely unaware this was happening until the day Darla finally ran out of credit and confessed to Don what was going on. If you are wondering how Don did not know this was happening it was because Darla was using the credit cards to make the payments on the credit cards.
By this point, between the two of them, they had almost $55,000 in credit card debt. And on top of that they still had a mortgage payment. All in all, they had $2500 a month going out towards debt and an income of $4000 a month. 62.5% of their income was servicing their debts. Yikes!
Initially we looked at them selling the home and using the proceeds to pay off all of the debts and then use what was left over to purchase a new home. The downside to this was that they would have to move and neither wanted to do this as they loved their home. Plus they had put quite a bit of money into it through remodeling. On top of that, the funds they would have had left over, after paying off their debts, would not buy them as nice of a home.
We finally decided that a reverse mortgage refinance would be the best way to go. They would be able to get $35,000 in cash to pay off a chunk of the debt and the mortgage payment would be gone as well. In one year they would have access to an additional $64,000 which they could use to pay off the rest of the debt. Even after paying off the remaining debt, they will still have a sizable credit line available to them. Initially, they will be saving about $1700 a month. And in one year, they could pay the rest of it off pushing their monthly savings to $2500 a month.
While they were going through the loan process they also used Consumer Credit Counseling Services. They got set up on a budget and went through their expenses. They found several things that they could get rid of, like storage units, which would free up an additional $350 a month.
With the help of the reverse mortgage and the guidance of CCCS, Don and Darla are going to recover $2850 of their monthly cash flow, 71% of their monthly income! Do you think that is going to make a massive difference in their life? Heck yeah baby!
If you are struggling with debts give me a call. Let’s see how much of your monthly income we can recover with a reverse mortgage. I work with clients all over Oregon.