I don’t want to be that blunt, but there are some things that are guaranteed, and I am going to address 3 of them as they apply to homeownership and aging.
- You grow older every day, it is inevitable.
- You must pay some form of taxes unless you have very specific strategies and fall into specific categories which have exemptions.
- If you own a home, while it is not required to have homeowner’s insurance (Unless you have a mortgage) it is for most people a non-negotiable protection that they want.
Let’s look at growing older: As we grow older (once we retire) some of us lose capacity to remember things. I like to say, “My head doesn’t have more room in there to store this” and thus I need a reminder. It used to be back in the day a reminder was a string tied to your finger, then a calendar on the fridge, then a paper planner, then an electronic calendar, and as technology progressed all those went to an electronic format. Which now brings us to auto pay and electronic transfer.
Let’s look at managing those payments: Now we tie in number 2 and 3 with the thought that “I have to pay my taxes and Insurance” maybe around the same time and those numbers are never going down. Some folks pay their property taxes twice a year, most I think pay them in December or January when they are due in one lump sum. What if we could automate this to not only make sure its done on a specific date for each, but with funds that are already sitting there? An escrow account of sorts, but with one special feature. IT GROWS! Using a voluntary “Life Expectancy Set Aside” is an ingenious way to not only auto-pay your property related charges, but to save you money doing it in most cases. I will give you a brief explanation just to whet your appetite, then it’s up to you to ask me for items specific for you or your client.
In most cases: Clients can set aside proceeds from their adjustable rate HECM to sit in an escrow like account that grows at the same exact rate as the rate on the adjustable rate HECM. This function is only available on the adjustable rate never the fixed. That money sits there and as I stated before grows and compounds at a rate equal to the interest rate on the mortgage. They can choose either a monthly adjustable or annual adjustable that has safety controls built in like a 5% or 10% cap on the rate. Those caps are lifetime caps, and the escrow account also has a “floor safety net’ that it will not go below.
In other cases: If the client does not have enough equity to cover the property taxes and insurance for life expectancy, we still have a way to save the money. You can watch my video with Steve to see this here. https://youtu.be/siJJS7S5Ex4?si=wKQi1HbvbxG5ZXaA
It is as simple as dropping the money monthly in to an account that has proven to grow at a rate higher than any savings account that I can find at any bank. I cant quote you the numbers here, but I can easily show you how it works, and arming you with that knowledge will assuredly benefit you in retirement!
Donald Battista, NMLS ID 2030959. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Arizona Mortgage Banker License 0926603. Florida Mortgage Lender Servicer License MLD1827. Louisiana Residential Mortgage Lending License 1025894. Oklahoma Mortgage Lender License ML012498. Texas Mortgage Banker Registration 1025894. 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