Are you living in a home that needs more maintenance than you can keep up with? Are you shelling money out each month to have others care for your home? Would you like to live in a smaller, more manageable home and have the freedom to use your money towards your financial future rather than maintaining your home or having it tied up in the equity of your home? If so, then a reverse mortgage may be a solution for you.
If you are 62 or older, you are eligible to take advantage of a reverse mortgage.
It wasn’t that long ago that you would have been well advised to stay clear of a Reverse Mortgage, you may have even read or heard about some of the horror stories of reverse mortgages.
Thankfully the federal government stepped in and regulated these loans so seniors would not be taken advantage of. Reverse Mortgages now provide a safe solution for those wishing to leverage the equity they have tied up in the their primary residence.
A Reverse Mortgage is a loan that can be used to gain access to the equity in a primary residence where the current home owner is 62 or older. There are no income or credit requirements and no monthly payments.
Depending on age, a reverse mortgage will cover between approximately 60% – 90% of the value of the home.
So when does the loan get paid back? The loan is good for 150 years and is ultimately paid out from the estate after the passing of the homeowner. If a husband and wife are both on the reverse mortgage, then the loan is not paid back until the passing of both.
What many people are not aware of, is the number of different ways a reverse mortgage can be used to achieve different retirement goals, such as:
- Refinancing an existing mortgage with a reverse mortgage and getting cash out to invest/fund retirement
- Purchasing a smaller home with a reverse mortgage and freeing up cash to invest/fund retirement
- Purchasing a vacation home
- Purchasing an income property
- Refinancing with a reverse mortgage to eliminate loan payments
Bob and Nancy want to sell their home and downsize into a smaller home. They are both 75 years old.
We help Bob and Nancy sell their existing home: $700,000
Pay off existing mortgage: ($100,000)
Balance left in Cash: $600,000
At the same time, we help Bob and Nancy purchase a smaller and more manageable home using a reverse mortgage.
The cost of their new home is: $350,000
The Reverse Mortgage will cover $230,000
Bob and Nancy pay the difference in cash of $120,000 from the $600,000 cash they received from the sale of their home.
BENEFIT: Bob and Nancy now live in a new more manageable home with no mortgage payment, and they now have an additional $230,000 for a total of $480,000 in cash to invest and enjoy in retirement. Without the reverse mortgage Bob and Nancy would have only had $280,000 cash after the purchase of their new home .