New Jersey can be an expensive state to live in for retirees. That’s one of the reasons why William Care, 83, and his wife Carol, 82, obtained a reverse mortgage.

For the past 60 years, the Cares have lived in Northfield, NJ, just west of Atlantic City, where they raised three kids, two boys and a girl.

William ran a construction company for many years and later a cabinet-making business. Carol held a series of accounting and bookkeeping jobs.

While they lived a comfortable middle-class life, the couple never saved for retirement. Until recently, they subsisted solely on Social Security.

Their annual income was so low that William and Carol relied on food stamps and energy assistance programs to pay for heating and electricity.

“We needed to get them more money to live on,” says their son Bill. “My brother, sister, and I were willing to help our parents, but it was challenging to do so while supporting our own families.”

Bill had a real estate license for many years and had heard about reverse mortgages. He did some research and ultimately connected his parents with local reverse mortgage specialist John Walters, CRMP, of Longbridge Financial.

As with all reverse mortgage transactions, William and Carol were counseled by an independent, U.S. Development of Housing and Urban Development-approved housing counselor to ensure they fully understood how a reverse mortgage worked and what other options might have helped them.

“My brother sat through counseling with my parents and they decided it was worth pursuing,” says Bill. “I helped get them through the rest of the application process.”   

The couple’s home was appraised for $300,000, which enabled them to borrow roughly $160,000.

Family members had been paying their real estate taxes in recent years, so a Life Expectancy Set-Aside was established to pay the property taxes and homeowners insurance policy for the next ten years.

The remaining funds from the reverse mortgage were set up in a line of credit that William and Carol could draw upon each month to cover basic living expenses.

Because they are receiving food stamps and energy assistance, which limit the amount of assets that a recipient can have to qualify, Bill said his parents will need to be careful that any funds from the reverse mortgage that they access are used right away.

For example, if they receive $3,000 in a lump sum for home repairs and spend it all in the same calendar month, everything is fine. Any residual funds remaining in their bank account the following month would count as an asset.

“It won’t be an issue as long as my parents don’t let any funds accumulate in their bank account, which we’ll make sure doesn’t happen,” says Bill.

He adds, “We haven’t had the reverse mortgage for very long, but I am glad we got one for our parents. It will help them to continue living in the home that they love so much.”