Issue 18.15
Part 2
3. How about using the mortgage when your investments are down. If they drop in value and you are pulling from them or using the income and cashing in during a low market, you are doubling up the adverse, because you are not only pulling from your investments to make a mortgage payment, but you are pulling from them in a down market.
4. How about those that cash in retirement funds or IRA’s to pay cash for a home? Who is giving them the advice? You take out $250,000 from your investment account to pay cash for a home and then you have to pay taxes on that 250K? Who is giving you financial advice? I don’t care if you have a reverse loan for the rest of your life or just for five years. There are better ways to strategize with taxes with this loan then the above scenario.
5. Finally, the biggest and most common is the scenario where you and your wife are fine income wise to make a mortgage payment. But, if something happened to you and you passed, can your wife still make that mortgage payment with less income. You will most certainly lose some social security income when you pass and most likely some pension and or annuity, so can she still make that payment not now – but in 10 years if something happens to you.
The entire point is that there is a reason that 70% of our clients, when truly understanding the pros and cons of the loan, opt for this reverse loan or line of credit versus a conventional loan or paying cash for a home. At the end of the day, it is an insurance policy that you and your wife are bullet proof in the home no matter how long either of you are alive. You are obligated to pay the taxes and insurance on the home and maintain it as a primary home, but I don’t care if you live to 120 years, no one has to make a payment and no one – including your heirs would ever be liable for any debt. That loan would never make sense if either of those things could happen, and certainly my father would not be in that loan, if we as children, needed to worry about picking up a bill at the end of the day. We don’t care if he does not make a mortgage payment for life and he enjoys his retirement and every moment of it, but it would not make sense if we could ever be liable.
Please understand one thing. The reverse loan is not right for everyone, but before you think you know the pros and cons of the loan and how people more than ever are taking advantage of the options it brings today, then please visit with a senior mortgage planner or an investment advisor and review the options today to make your own decisions. This loan that is government backed and FHA insured has less surprises then any loan in the market place and is certainly as regulated as any loan in the market place today. Until next time, Brandon Hansen.
Brandon Hansen is a senior mortgage banker for Cherry Creek Mortgage with offices in St. George and Sun River – www.cherrycreekutah.com 435 525 2266/ 435 773 4164.