Older adults have option to sell a home without moving
NEWARK, N.J. – May 10, 2018 – A new investment system not yet in Florida may appeal to aging boomers: In exchange for some money now and perhaps more later, "Irene" buys houses, allows residents to stay "forever" or rent it out, and pays for all real estate taxes, insurance and structural maintenance.
It's not a reverse mortgage, which generally doesn't involve a change of homeownership. It gives the homeowners a percentage of their existing equity in exchange for taking ownership at a later date when the older adults move out.
Instead, Irene buys seniors' homes now, though the amount of money involved is still based on the equity they have in the house.
While Irene only operates in New Jersey so far, the new system could prove to be a viable option for older adults considering a reverse mortgage since they remain in the home under both scenarios, but Irene offers freedom from property taxes, property insurance and home maintenance.
"Every one of our client's situation is unique," Irene explains on its website. "There are no out-of-the-box solutions when it comes to navigating retirement."
Irene has two programs for older-adult homeowners. The first, Safe Stay, "is designed for those with low outstanding mortgage balances to secure retirement in their home." In the Safe Stay alternative, older adults can continue to live in the home for free.
The second Irene option, Safe Lease Back, provides more money upfront to the homeowner – up to 80 percent, according to its website – but the owner would then pay monthly rent as long as they live in the house.
One difference in a comparison with a reverse mortgage: The amount of money a homeowner might receive from Irene when they eventually leave the property could vary and perhaps be nothing depending on their equity, the original deal and how long they ended up living in the house. With a reverse mortgage, there would be fewer financial unknowns upfront and likely a higher amount of money in the beginning.
Irene says its arrangement would be best for older adults who "want the comfort of their homes without the expenses (and) have low outstanding mortgage balances."
In a theoretical example posted on its website, Irene says a widower who owns his $300,000 home outright might receive $135,000 upon sale to Irene under the Safe Stay option. In exchange, he could live there for the rest of his life with no worries about real estate taxes, insurance and structural maintenance. If he decides to leave the home, Irene will pay "an additional amount" and "inherits the home upon John's passing."
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