Finding retirement dream home in California

Robert and Melissa had achieved their dream retirement.

Their 3200 sq.foot, 4 bedroom/3 bathroom home was perfect for the two of them. Located on the 10th fairway in one of the most prestigious gated golf communities in Arizona, they were living in their forever home.

dream retirement

Or so they thought!

They came to realize their dream retirement included being closer to their children and grandchildren who lived in Southern California. The six plus hour drive From AZ to SoCal made it difficult for them to see their family as much as they would like.

Related: November election promises property tax relief for senior homeowners

California real estate sticker shock

Senior home buyers considering relocation to California find a housing market highlighted by record prices and ever shrinking inventory. Robert and Melissa had heard the horror stories and were concerned they might not find the right home near their friends and family.

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As they did their online house hunting Robert and Melissa came to realize that finding a comparable home in a gated golf community in California might be beyond their reach.

Retirement Home Sq footage Bed/BA Price
Arizona 3200 4/3 $650,000
California 3399 4/3 $680,000

Strategies for dealing with the shortfall

After commissions, closing costs and paying off a $100,000 line of credit, they would net about $500,000 from the sale of their Arizona home, creating a shortfall of almost $200,000 for the purchase of their California retirement home.

They had enough to cover the shortage in their retirement funds, but were facing serious tax consequences if they liquidated that much. They were also concerned with how it would affect their SSI and Medicare.

Related: 25 retirement solutions using The New Reverse Mortgage

The New Reverse Mortgage to the rescue

Let me explain…

In 2008 HUD added the purchase option to its stable of HECM (Home Equity Conversion Mortgage) programs.

With the HECM for Purchase reverse mortgage, the borrower provides a down payment using the sale of the previous home or other savings.  The equity earned through the down payment and the new home’s value is then used to calculate the reverse mortgage loan amount.

Robert and Melissa’s new retirement plan

Purchase Price Down Payment Loan Amount Monthly Payment Equity Reserve Cash Reserves
$680,000 $396,543 $283,456 0* $371,439 $103,456
*Homeowner still responsible for payment of property taxes, homeowner’s insurance and property maintenance.  (Figures are for demonstration purposes only)

Related: Thinking about downsizing? Think right sizing!

Robert and Melissa now have their dream retirement home

Now that their family is nearby Robert and Melissa are enjoying their new golf course home plus they have an additional $100k in their retirement portfolio. It took some out of the box thinking on their part but the end result is they’re living the dream retirement they had planned.

Related: Choosing the right reverse mortgage lender

The New Reverse Mortgage isn’t for everyone…but it could be!

If you’re still wondering if a Reverse Mortgage is the right solution for you but you’re not ready to sit down with one of our Reverse Mortgage Experts, then we’ll be happy to mail (or email) you Use Your Home to Stay at Home which is the official federally approved consumer booklet for those considering a reverse mortgage.