A Reverse Mortgage Could Supplement Your Retirement Plan
Here is a great article about how to use a Reverse mortgage as part a saving plans. Many retirees are experiencing a shortfall in savings. Did you know you can extinguish your existing mortgage and allow your reverse mortgage to build a growing line of credit? Seniors can tap the line of credit when needed and keep taxable retirement funds is place, of course always consult your financial planner or CPA in regards to retirement planning.
According to the article in Fortune Magazine by Matthew Heimer taking a Home Equity Conversion Mortgage or Reverse mortgage early as possible could provide a boost to ones sagging retirement plan.
Here is an excerpt from the article:
Guttentag’s strategic take focuses on two quirks of the federal rules governing HECMs. One is that the amount you can borrow is indexed to your age—so the earlier you take one, the bigger the line of credit you can set up. The other is that if a homeowner opens a HECM credit line, but doesn’t use it right away, it can earn interest over time, at the prevailing mortgage rate plus 1.25%. That’s much more interest than a saver would earn from, say, Treasuries—and the rate rises whenever the Federal Reserve raises rates.
Hence Guttentag’s advice: Take out a HECM as soon as you’re eligible, at age 62, and hold off using it for as long as you can. Fifteen or twenty years down the road, when homeowners are more likely to have depleted their savings, they can convert the HECM credit line into a so-called tenure payment. And thanks to the compounded interest, he argues, that payment is likely to be much larger than what they would have gotten by putting a comparable amount of cash into an annuity–a common strategy among income-seeking retirees. Guttentag lays out some hypothetical scenarios in the chart below:
To learn more about how to qualify for a reverse mortgage or just to ask a question, please call me at 214.945.1066
Richard Woodward, NMLS 217454
Your Local, Direct, 5 Star Rated Mortgage Lender
Office: (214) 945-1066
www.MortgageProsUs.com/ReveresMortgages
Service First Mortgage NMLS 166487
6800 Weiskopf Ave #200, McKinney, TX 75070
Licensed by the Texas Department of Savings and Mortgage Lending (SML) Mortgage Banker Registration. Service First Mortgage is an Equal Housing Lender. This is not an offer of credit or commitment to lend. Loans are subject to buyer and property qualification. Rates and fees are subject to change without notice.
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