USING HOME EQUITY TO A HIGHER DEGREE
Widowed, and with no children of your own, you have found joy in helping your younger brother, who has very limited means, by contributing towards his one child’s college costs. Highly dedicated to pursuing an advanced degree in aviation engineering, your niece is close to completing her undergraduate work. At a recent visit with you, she proudly reported that she’s been accepted into a coveted graduate training and research program beginning in January. However, she learned, the Grad PLUS federal loan program she’d planned on using (which would have allowed her to borrow the full cost of tuition) has been eliminated for new buyers. With her usual thoroughness, your niece looked into her options under the new Repayment Assistance Plan.
You’re extremely proud that this young woman has been so highly disciplined and thoughtful about money matters, keeping her “eye on the ball” in achieving career goals. You and your late wife were in total agreement about being fiscally responsible. Now, following this new development with the niece, you feel at somewhat of impasse. Your own retirement is planned for the end of next year. With the recent escalation in everyday living costs, you are fearful of jeopardizing your own carefully thought-out income plan. (The basics are in place — you’ve decided to continue living in your home rather than move to a retirement community and in fact have updated the home to make it more aging-in-place-suitable. You’ve been working with your financial advisor on a planned income withdrawal and investment reallocation plan.)
Rather than adjusting your own carefully thought-out retirement income plan, you might consider tapping into your housing wealth in order to help your niece with her advanced education costs. By applying for a government-insured Home Equity Conversion Mortgage, or HECM, you can convert home equity into a source of tax-free* cash. You’d continue to be responsible for property taxes, insurance, and maintenance while using withdrawals from your equity line of credit to help your niece with her costs. There will be no required mortgage payments;** in fact, any unused portion of your equity will grow at the same rate as the interest being charged on the borrowed portion.
Continuing to serve as a good example of fiscal responsibility, you would be using your home equity “to a higher degree”.
https://mutualreverse.com/david-garrison
*Please consult a tax advisor. **Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees.
David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.org
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