options of a reverse mortgage
Hello BP Peers,
I have a relative who is looking to move and retire to another state from where she resides. She has a condo now with a remaining mortgage of about $100K. The condo's un-appraised value is approx $250K. Her next residence she is wanting to move to will cost around $225K. She is on a fixed income with limited funds in her savings. I am trying to see if she can afford to keep her current condo and rent it for cash flow to support both condos. However, this will hinder her ability to come up with a traditional 20% dp and new mortgage payments. She is being advised to sell her current condo, pay off the existing mortgage, use the balance to support the 20% dp and then invest the rest in the market where she might receive $400-$500 return monthly for living expenses (too risky in my opinion). Another option is to sell the current condo and apply for a Reverse Mortgage. Then she will not have to come up with a dp. But in this scenario the bank will own the house (especially if she outlives the money from the loan. She is 72 years young. Again, I am suggesting keeping the current condo for cash flow and looking for loan options for the new condo.
Lastly, she is not wanting to put the new condo ownership in her name as it may hinder her in regards to Medicare and Medicaid (her words)? She wants to have the ownership under the names of her beneficiaries (her children). However, I am concerned with that option as having another asset under their names could negatively affect their ability for future loans (personal, business, college) and increase their annual tax bracket???? Any advise is much appreciated...