REVERSE MORTGAGE RETIREMENT SOLUTIONS

Learn how a reverse mortgage retirement solution can be a solution for you.

Understanding Retirement

First of all, you have to realize that retirement today can last 20-30 years or more, and it’s next to impossible to be prepared to maintain one’s lifestyle for that long without income. Another thing, we’ve learned…or should have learned…is that we cannot depend on the stock market to produce steady returns that we would need to retire. And we all know that when it comes to home values, what goes up can also come down. The HECM or retirement reverse mortgage can be literally a Godsend in so many ways. It can make retirement possible when it wouldn’t be possible otherwise.

1. Stop Paying Your Mortgage at 62

Let’s say you’re 62 and you have a $300,000 mortgage balance and a $3,000 monthly payment.

And you refinanced your traditional mortgage into a HECM reverse mortgage, which would allow you to stop making your $3,000 monthly payment on the $300,000 mortgage balance. So, you stopped making that monthly payment to the bank and started paying it to yourself. You put the $3,000 a month into an investment account, like the S&P 500 Index Fund, and by doing so you start making the benefits of compounding interest benefit you instead of the bank.

Ten years later, you could expect to have something like $600,000 in that account… and your reverse mortgage balance will have increased to something like $470,000, according to the FHA expected rates. So, at that point you could decide to pay off your mortgage balance of $470,000 and you’d still have $130,000 left over. Or, you could continue not making payments and retire with an extra $600,000 in savings. Or, you could sell the home and use the equity to buy a smaller home in a retirement community. Or, you could do whatever else you wanted to do. I don’t care how you slice it… if you’re 62 or over and you’re still making a mortgage payment, you should look at what a reverse mortgage can mean to your financial security during your retirement years.

Because nothing else can do what a reverse mortgage does!

2. Use a reverse mortgage to create income during retirement

I spoke to a couple in their late 60s. Their home was almost paid off and worth about $650,000, but they had no retirement savings to speak of… and as a result, they were both still working. They told me they didn’t think they’d ever be able to retire.

So, I described an alternative path using what’s called a HECM for Purchase. If they sell the home, after sales commissions, the couple would end up with roughly $600,000. Then they could take $350,000 and buy a four-plex for something like $700,000. They could fix up one of the units the way they like it… put in a Jacuzzi and an island kitchen… whatever they want. Then they live in that unit and rent out the other three… let’s say for $800 a month each. Now the couple would have $2400 a month in rental income, plus their Social Security, which was about $2800 a month. Add it all up and their income would then be $5200 a month… and they’d have NO MORTGAGE PAYMENT. Plus they’d still have something like $200,000 in the bank.

Now they could both stop working and start enjoying their retirement years, even though they had no retirement savings to begin with…. now they’d have $200,000 in savings… $5200 in monthly income… no monthly mortgage payment… and roughly 50 percent equity in their property.

Show me another way to accomplish that? You can’t.

3. Buy a motorhome or vacation home

Let’s say you’re over 62, your home’s worth $400,000, and you borrow $100,000 using a reverse mortgage, so you decide to buy that motor home you’ve always thought of having during retirement. First of all, you’ll have no monthly payment. And you’ll have a beautiful motorhome to travel the country in, visiting friends and relatives and enjoying your retirement or semi-retirement. Now, let’s consider the actual numbers involved…Your home was worth $400,000 when you took out the reverse mortgage, and let’s say that over ten years it goes up in value by something like three percent a year. So, in 15 years, the home is worth roughly $580,000… and you sell it to move into a smaller home or whatever. You borrowed $100,000 using the reverse mortgage, and ten years later your balance has gone up to let’s say $150,000. So, when you sell the home for $580,000 and pay off the $150,000 reverse mortgage, you end up with roughly $400,000 after paying sales commissions.

That’s how much the home was worth when you took out the reverse mortgage ten years ago. And don’t forget… you’ve also still got a free and clear motorhome. In that scenario, your home’s appreciation paid off your $100,000 motorhome and the interest… you never had to make a monthly payment…

and the memories of traveling the country during those ten years, I would say, are priceless.

Show me another way to make that happen? You can’t.

California reverse mortgage line of credit for cash

4. And there are many other ways to use a reverse mortgage to make life better

California Reverse Mortgage Line Of Credit Example

You could use a California reverse mortgage to simply have an open line of credit. You may not need to access the funds, but as you get older, you just never know. And if you do need the money, it’ll always be there. The HECM California reverse mortgage line of credit can never be cancelled, and if you do need the money, you won’t have to pay it back until you and your spouse pass away, or when you sell the home. Honestly, I don’t know why EVERYONE doesn’t do that.

Or, maybe you want to start a business… a second career, if you will… in order to create an income stream to support you during retirement. My wife has talked about opening a flower shop during retirement, and I’ve always thought about owning a small restaurant/bar. No matter what you’re thinking about, the HECM reverse mortgage in California is a source of capital like no other because it doesn’t have to be repaid on any certain schedule, or not until you sell the home or die.

Show me another source of funds that allows that? You can’t.

Sticker Shock

The Costs Seniors Face Annually:

Medical Needs

Especially dental work averaging

$10-20k

Vision Care

Glasses/contacts, minor surgery 2-5K

Medicare Supplemental

Additional plans/medicines

Home Repairs

Painting, plumbing, air conditioning $5-10K