Issue 26.12
For many years the Reverse Mortgage was known to be an option for financial relief for seniors who found themselves without antiquate means for retirement. They saved their whole life to get their home paid off then the reverse would allow them access to a large portion of the equity and no payments were required as long as they continued to live in the home. It is a great concept and remains a great option to this day.
The Golden aged home owner of today’s generation seems to be more bold and creative. Since the Reverse Mortgage offers so many different methods of acquisition, opportunities may be available to use the equity to benefit even when income is not a problem. Some examples of these creative ideas are listed below:
Taking advantage of the down Real Estate market seems to be the most popular new way to use the equity. With about 60% of the home’s equity available to turn into cash, the home owner can use the funds to buy an investment home, collect the rent as positive cash flow and have no monthly payment on either the rental (as it is paid for with cash) nor the primary residence due to the Reverse Mortgage. Since the market is close to the bottom as values go, the appreciation should prove positive for the estate of the homeowner as well.
Another creative way to utilize the Reverse is the Variable rate option. This starts at a lower rate of interest but more importantly offers a choice to use an Equity Line of Credit. No interest is charged on the unpaid portion just as a typical line of credit but the Reverse actually offers a growth rate for the line of credit of .5% higher than the current charged rate of interest for the rest of the loan. This means your line will grow in value while you are not using it. When it is time to withdraw the money, you may take the entire amount with no payments due as long as the home is occupied as a primary residence.
For more information on how to utilize the Reverse mortgage to your benefit, call Scott Gibson 435-767-1092 Remember, Education is free!