Reverse Mortgage San Diego
With millions of retiring baby boom generation seniors combined with the expensive residential real estate, reverse mortgages and San Diego are ideally suited for one another. This generation of seniors prefer to age in place, and reverse mortgages give San Diego residents the opportunity to stay in their homes and eliminate monthly mortgage payments.
With just under 1.4 million residents, San Diego is now the 2nd largest city in California and 8th largest in the US. The surprise shouldn’t be how high on the list San Diego is, but why it hasn’t drawn even more folks to its amazing beaches and weather. Of course, San Diego is merely one city surrounded by other cities in what we now call an Urban Agglomeration or Metropolitan Area. Now the numbers are much higher with roughly five million inhabitants occupying the Southwest Corner of the US map.
San Diego is a mecca for seniors. Given the resources, senior will tend to move to dry, warm, sunny places. San Diego lays claim to having the best weather on the planet. When you check out the chart below, it is hard to argue with their conclusion. With most of the city sitting close to the coast, the surrounding suburbs are stretching into the desert, providing even warmer conditions with less humidity.
Home builders know that seniors love San Diego, and they are building dozens of over 55 communities to serve them. While many seniors prefer to stay in the homes where they raised their families, others are realizing the advantages of moving into these specialized settings. The reverse mortgage for purchase or HECM for purchase has helped many San Diego residents to purchase retirement home where they will never have to make a mortgage payment.
Another approach for San Diego Seniors is to use the reverse mortgage as a wealth management tool. Most seniors who sit down with retirement planning counselors are interested in one huge question: “Do I have enough money to live well for the rest of my life?”
It has been common practice for wealth managers and retirement analysts to look at social security, pensions, savings, and assets such as stocks, bonds, and other assets for the funds necessary to sustain a lifestyle for 30 years. Often there really isn’t enough to do the job when these are the only assets considered.
Recently, wealth managers are starting to add home equity into the mix of potential resources for cash during the retirement years. A widow or couple who might have $4000 a month income and a $1500 a month mortgage payment, might find that their home equity will increase their monthly income to $5000 and eliminate the mortgage payment, completely. That could change their opportunities for having a full life dramatically. They will have far more money to spend on travel, the grandkids, and be prepared for emergencies.
Why is San Diego any different than say Phoenix or other senior retirement communities when it comes to using reverse mortgages as a wealth management tool? The simple fact is that San Diego home prices are just a lot higher, thus the equity is likely to be much higher. San Diego’s median home price is over $600,000 where the same home in Phoenix would be slightly over $200,000. If the owner has 60% equity, the available amount would be $360,000 in San Diego vs $120,000 in Phoenix.
Of course, some seniors who live in San Diego also see the huge opportunity to take their equity and move to a less expensive home in San Diego or to a less expensive city like Phoenix, Las Vegas, or even Dallas. Now a family who doesn’t have 60% equity in their existing home can buy a home where the equity in their current home will provide over 60% down in their new home, thereby eliminating mortgage payments for life.
Here would be an example. The family has 40% equity in their $600,000 San Diego home. That gives them at least $200,000 in cash after selling expenses. They can now buy a very nice $300,000 place, put $180,000 down, have $20,000 left for savings, and never make a mortgage payment again.
If you live in the San Diego area and you or your spouse is over the age of 62, you might benefit from a reverse mortgage also known as a HECM loan. There are basically three ways to utilize the equity assets that exist in your home.
You can use the HECM to pay off your existing mortgage and never make another mortgage payment. If you have enough equity, the HECM can also make your property tax and insurance payments. If not, it is an absolute necessity that you make those payments and that you maintain your home. You must also continue living in the home as your primary residence.
You can set the HECM up as a line of credit (LOC). Every year the line of credit will get larger automatically based on a formula. You can take some money out as cash at the time of the loan, set up monthly payments to improve your cash flow, or leave all the money on the sideline where you can borrow as needed. You can also do a combination of all three.
You can use the HECM to buy a new residence and not have any mortgage payments. Generally, this would be as described above. The senior family would move into a final residence that would be perfect for retirement. The proceeds of the sale of the existing home alone or in combination with other assets would create the necessary equity in the new home to cover future mortgage payments.
There are other potential uses for this financial tool. Please see the list here.
If either of these three approaches seems to provide a potentially useful
solution in your circumstance,
please contact Brandon Webb to discuss details.
1-800-486-8786 Ext. 868