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Retired With a Mortgage? Pay Yourself, Not the Bank!

Issue 29.16

Many seniors in today’s economy retire with a mortgage on their home.  As they shift to a retirement income and they face increasing health care and living costs, some seniors find it difficult to make ends meet and stay in the home that they love.  Many people don’t realize that they can easily eliminate their mortgage payment and pay themselves instead.

To illustrate, let’s assume that your home is worth about $250,000 and you have a loan of about $94,000 with 10 years left to pay.  If you make your monthly payments for the next 10 years you will pay almost $115,000.  That’s almost half of the value of your home!  Even worse, those payments include more than $20,000 of interest, or bank profit.  Instead of making all those payments, why not refinance your existing mortgage with a reverse mortgage and NEVER MAKE ANOTHER MORTGAGE PAYMENT as long as you live in your home!  That means that you just added $115,000 to your retirement savings over the next ten years by simply refinancing your mortgage.

Whenever clients and I explore refinancing an existing mortgage with a reverse mortgage, I encourage them to pay themselves with the money they saved from making no mortgage payments.  This is important because a reverse mortgage gets bigger over time, decreasing the equity in your home. By paying yourself, you can offset this reduced equity and have greater control of your cash flow to meet your financial needs and objectives such as

*Ongoing living expenses.

Building up a cash reserve in case of an emergency.

Paying for health care costs or long term care insurance

Pre-paying your funeral expenses

Investing the funds in secure investments (always seek the advice of a licensed, qualified and seasoned investment advisor.)

Giving your heirs CASH instead of equity in your home.  It’s immediate, easily divisible, and avoids real estate fees.

Of course, if your financial necessities are met you can always use the increased cash flow to just do something fun.

A reverse mortgage is an important financial tool to help seniors extend their retirement resources.   It frees up much needed cash, gives you more options and guarantees you can live in your home as long as you wish, all without requiring a single payment to the bank.  Call me so we can discuss how this tool will benefit you. (435) 772-8155.

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