“For some clients, a second home might sound like an impossible dream. But advisors warn that the maintenance, tax bills, and insurance headaches (if you can even get insurance) can easily turn the reverie into a nightmare,” Ben Mattlin cautions in Financial Advisor Magazine.
On the positive side, CEO Brett Bernstein of XML Financial points out (in the same article), there is substantial value to be gained by owning a second home – not only the sheer enjoyment of using the property, but potential income from renting it out, possible appreciation in value, and a legacy for heirs.
For homeowners over the age of 62, using the housing wealth they’ve already acquired and by taking out of reverse mortgage loan, can take some of the “sting” out of the purchase of a second home, using the equity built up in their “home base” property to help finance the acquisition of a second property. While Federal mandates require that the mortgaged property continue to be the owner’s primary residence, so long as at least six months out of the year are spent “in place”, there is plenty of opportunity to enjoy time spent in the second home.
Of course, no one needs a second home, as one advisor points out in that Financial Advisor article, concluding that, “it’s important to think this step through logically”, given that “the abrupt rise in property values, insurance costs, and interest rates have made real estate ownership a lot more expensive.
“Thought through strategically”, as Wade Pfau, retirement researcher and professor at The American College of Financial Services comments, “The reverse mortgage can help people maximize their invested assets and end up leaving heirs with more than they otherwise might.”
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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 | Equal Housing Lender