Should I get a Reverse Mortgage or Move to a Less Expensive House?

This is a frequent question that is addressed considering a reverse mortgage. In the end only the homeowner can decide which is best for them and their family.

Most of the time however our clients have lived in their home for quite some time. Often they have raised families, have done inumerable improvements, have strong ties to the immidiate community, and the comforting feeling familiarity brings.

My point is when considering moving as a "$$" decision it is impossible to put a dollar figure on those things I mentioned.

Then of course the cost of moving is high. As a licensed R.E. Broker (CA DRE Lic. 01144254) it is my experience that most sellers prefer an established real estate firm/agent when selling their property. This being said plan on paying a 5% commission on the sales price of the home so a $400K home would be $20K+/-. Plus the closing costs and the cost of getting the home ready to sell. In this market the house that sells best is the one that is virtually perfect in appearance and priced below other similar properties in the area. So how much money will it cost to get the house "ready" to sell?

Then there are the costs associated with the move. Because most people would be moving into a smaller space there are also the "what do I do with my stuff" questions. Storage for a couple hundred dollars a month?

Of course one has to consider the frustration of trying to find a new place to live....and the cost.

Don't forget about possible tax consequences of selling the current residence. You probably have lived in your house for 2 of the last 5 years which means that up to $500K of gain is tax free for two people assuming both have been on title. Only $250K is tax free if only one person has been the resident and on title for 2 of the last 5 years. So what if any tax consequences will there be on the sale?

Of course if you are living in a large home (large to you) and it is too much to maintain then moving might make a lot of sense. Perhaps moving to be closer to family or for other ease of living issues makes good sense too.

At the "end of the day" however when it just comes down to which decision is best based on affordability then there are several issues to consider.

Best,

Terry Dyer
President
All American Reverse Mortgage
800-201-0343 x 227
terry@jettfi.com

Lic. in CA,AZ,OR,WA,FL,IL