12. Your great aunt, age 75, lives in her home on which she has a loan of $35,000 left but needs money to pay for home improvements that have been completed. She re-did her bathroom and entire home to be handicap accessible at a total cost of $65,000, which she has not paid yet. She has a home worth $200,000 today and a PLF of 0.6.

a. Does she qualify for a reverse mortgage? Why or why not?

b. If closing costs include $4,000 for fees, a $1,000 appraisal, and $1,000 in insurance, what will be the amount of funds she takes home with her after closing? Assume she takes out the maximum dollar amount she can on her home and has the bank pay the money she owes contractors directly for her home improvements.

2. C. She lives to be 100 years old before passing on. Her reverse mortgage was locked in at a rate of 3.5%. At the time of her passing, the home is worth $305,000.

   1. What does her estate owe the bank at the time she passes away? 5 pts

   2. If it takes 6-months to sort out the estate, what is owed at that time? 5 pts

   3. Assuming 6% of closing costs, if you could sell the home for $320,000, would you choose to sell the home or give it back to the bank? 5 pts