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Here's How To Avoid Dipping Into Cash Reserves For Home Repairs

Apr 15, 2008
Aging in place is the dream of 92 percent of our Michigan senior population. Home repair and improvement financed with a reverse mortgage makes this a reality.

Being able to afford home repairs when you get to the senior level can be challenging if you are not prepared. Living off of limited earnings can lead to a meager existence. Getting the essentials for comfortable living can be hard to come by if you're not prepared.

Imagine not having something as critical as air conditioning in your home if you are a senior. Not only is this uncomfortable but it can be life threatening in case of a heat wave. The same can be said if you didn't have adequate heating for your home. A lot of seniors unintentionally put themselves in dire situations when it comes to having the bare essentials. That is why having a Michigan reverse mortgage can play such a critical role in the life of a senior citizen.

There are many other things that are important to a senior household including plumbing. Not having a good plumbing system to lead to other problems when owning your own home. Having leaky pipes can lead to water damage and further lower your homes overall value. This can have a catastrophic effect on your living arrangement and damage your quality of life.

And when you're talking about home repairs we cannot leave out safe and adequate roofing. You want to make sure that your roof is kept in good condition. If your roof is left to fall apart this can lead to interior water damage to your property and lower the value of your home.

Home repair and improvement can be broken down into three distinct markets:

1.Home repairs due to deferred maintenance. An estimated 35 to 45 percent of all reverse mortgages require some type of home repair to meet HUD's minimum property standards.

2.Home improvements and modifications to meet the changing needs of senior adults to make a home safe, and enhance comfort and convenience.

3.Preservation and rehabilitation of an historic home. Today, the preservation and rehabilitation of historic homes is integral to the mainstream housing market.

More neighborhoods are forming preservation associations, and more cities and states are developing incentives to support preservation and rehabilitation of historic homes.

Financing home repairs and improvements can be a real problem for many senior adults. It would typically require a home equity or home improvement loan. First they must qualify, which may not be possible for senior's who's sole income is from Social Security. Second, they must make monthly payments which could cause financial hardship.

Robert Bruss is a real estate attorney and syndicated columnist. A home owner asked him the following question:

"I am 68 and a homeowner who is "property rich and cash poor" as you say. My $400,000 house needs a new roof that would cost $15,000 to $20,000. My daughter says I should take out a home equity loan but I don't know how I will afford the payments on my limited retirement income. I don't want to touch the $35,000 I have in CD's except for an emergency. What would you do?"

Response from Robert Bruss:

"Spending up to $20,000 of your cash reserves on a roof would be the least costly of alternatives, but it will leave you with depleted liquid reserves. You need increase monthly income to fully enjoy retirement. Consider a reverse mortgage that never requires repayment until you sell your home, move out for more than 12 months or die.

Meanwhile you can enjoy any combination or (1) monthly lifetime income, (2) lump sums as you need them and /or (3) a credit line or (4) a combination of the above.

A home equity loan requires monthly payments. If you are already short of cash, making monthly payments will further deplete your cash."

Michigan reverse mortgages are the perfect means to finance home repairs and improvements with no credit or income qualifying, and no monthly payments to worry about.
About the Author
Kaye Reverse takes care of Reverse Mortgages for its many senior clients in Michigan. To see if a reverse mortgage is right for you and you are a Michigan homeowner log onto: http://www.kayereverse.com/dvd.html and get the FREE DVD.
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