Reverse Mortgages for Retirement Cash Flow
The original concept of the Reverse Mortgage has evolved over the last 50 years which was: “to create a mortgage loan product that allows seniors to tap into a portion of their home equity while they live in the home, which does not require a monthly payment”.
As always with home ownership, you are responsible for paying your Property Taxes and Homeowners Insurance. As long as you do, and maintain and live in the home as your primary residence, then you can live in your home for as long as you choose to…and never have to make another mortgage payment.
However many people choose to make voluntary payments, because any payments are set aside in a growing line of credit and can be drawn out tax-free*, if cash is needed at a later date. Any outstanding balance on the loan is paid off when you sell, or when the last remaining borrower leaves the home permanently.
The Home Equity Conversion Mortgage, known as a HECM is the only Government Insured Reverse Mortgage, regulated by the federal Housing Administration. This HUD Insured Loan, became a permanent FHA program in 1999. It’s common today for seniors with paid off homes, to open a HECM in order to access this growing Line of Credit (applies to unused funds) for emergencies, or as an added stream of tax-free* cash flow.
At a time when many seniors are working well past age 65, when future income is so uncertain, making payments voluntary is an idea whose time has come.
Required Mortgage payments in retirement is a common problem. According to data by the Urban Institute, 9.18 million homeowners age 65 or older carry mortgage debt…which is up 60% from just one decade ago. Many people refinanced late in life, adding years to the loan, and thousands of dollars of additional interest.
The Risks associated with required monthly payments and the burden of debt follow many into old age. Today, 26% of 80 year-old homeowners have required monthly mortgage payments, which is 2 and-a-half times greater than just 10 years ago.
To find out more about converting to a HECM, give me a call, and let’s see if we can free you up from the worries of making required monthly mortgage payments.
I’m Paul Donohue, I look forward to speaking with you soon.
Interested in a reverse mortgage in Asheville? Learn more from the professionals.
* This advertisement does not constitute tax advice. Please consult a tax advisor regarding your specific situation.