Too late to buy?

Many people in their 50s or 60s who do not own a home may think buying a home won’t benefit them, but it can.  This is the story of one such person.  Mary (not her real name) was single, age 59, and renting in 2012. Her income was  about $3,000/month.

In March 2013, she bought a two-bedroom condominium for $100,000 with a 3.5% down FHA loan.  Her monthly payment including consumer debt totaled $1,193.31.  While living there, she maintained the property and made some low-cost improvements.

In August 2015, 2.5 years later, Mary sold the condominium for $168,000. This enabled her to pay off her consumer debts and buy a three-bedroom condominium for $180,000 with 20% down.  With no remaining consumer debts, her monthly payments were $1,122.79.

Let’s say current appreciation continues. By March 2018, five years after she bought the first property, she should have enough equity to obtain a Reverse Mortgage and eliminate her mortgage payment.  She will then be in a home with expenses for taxes, insurance, HOA, and maintenance of about $550/month.  She will have two extra bedrooms that she can rent out using www.Silvernest.com or www.SunshineHomeShare.org to provide additional income.

The net effect? Based on current numbers, Mary may be able to stop working and live on her Social Security income when she reaches full retirement age.  If she had not purchased a home, it is unlikely that her Social Security alone would have been adequate to pay market rent.  Additionally, rooms on www.Silvernest.com or www.SunshineHomeShare.org may rent for more than what her condo will cost with a Reverse Mortgage.

I cannot predict future appreciation, but wouldn’t you agree that owning a home without a mortgage payment is a good option for low cost housing?
Orion Mortgage, Inc. offers Reverse Mortgages and HECMs to eliminate the mortgage payment for homeowners over 62.  Call Don Opeka at 303-469-1254 with questions.  Colorado MLO license 100007878