HOUSING WEALTH CAN ENABLE AILING SPOUSE TO STAY HOME

For the past six months, your wife’s health problems have been worsening, and the recommendation has been for her to move into an assisted living facility nearby. Right after COVID, the two of you, both age 71 at the time, had decided that you were not going to sell your home, instead resolving to “age in place”. To that end, you had made certain structural changes to the home, including having a walk-in bath installed and moving the laundry room to the main floor.

Now, the realities of your wife’s illness have forced you to take a new look at your overall situation. Although you each have a Long Term Care insurance plan, the first 100 days of facility care are not covered, and the plan benefits cover only three years of care for each of you. True, even after the home upgrade, you have remained debt-free, it is plain that health care costs are going to present more of a burden than you’d anticipated. With the value of the home having increased (both because of overall real estate appreciation and the upgrades), you’re wondering whether applying for a home equity line of credit might prove your best course of action. 

Consider accessing your housing wealth through a reverse mortgage. Right now, both of you qualify as eligible borrowers, since the property is your primary residence. If your wife later moves to an assisted living facility, so long as you continue to live in the home and meet the ongoing obligations of paying property taxes and insurance on the home, the reverse mortgage would remain in place.

On the other hand, you might speak with your wife’s physicians about the feasibility of using in-home healthcare services. In fact, one significant benefit of reverse mortgages is the ability to use the proceeds to pay for in-home medical care (which can be less costly than nursing home or assisted living facilities. What’s more, unlike a “forward” loan in the form of a home equity line of credit, with a reverse mortgage there will be no principal or interest payments due, and withdrawals from the line of credit will be tax-free.*

Tapping the value built up in your home is all about using housing wealth to create “healthful” ways to cope with medical costs.

https://mutualreverse.com/david-garrison

Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).

*Please consult a tax specialist. 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.orgEqual Housing Lender

YOUR REVERSE MORTGAGE NOW AND LATER

Ten years into a second marriage, and now four years into retirement, you’re grateful for the decision you made to sell each of your homes, jointly purchasing the one in which you now live. Together, you’re reaping the benefits of the saving and planning each of you had done in preparation for leaving full-time employment. Another positive is that each of you has been able to generate extra “spending money” through consulting and speaking gigs. Despite all these positives, you are fearful of proceeding with a long-held plan to take a month-long intercontinental cruise. With costs of living on the rise, you’re concerned about a discretionary expenditure of that size, but want to realize the dream while you’re both healthy enough for international travel. 

You’ve been exploring the possibility of using the equity in your home by applying for a reverse mortgage (you attended a seminar on this at church).  The attraction is that you would not need to either liquidate investments, possibly generating capital gains tax, or disturb either of your rollover retirement accounts. Your one concern is that neither of you wants to impose a later financial burden on your children (you each have one adult child; she has two grandchildren). You’re worried that, since you would be drawing money out, with no certainty of being able to replace it later on, the interest on the reverse mortgage loan would build up over the years, with our heirs needing to repay that loan for much more than the house itself might then be worth.

Reverse mortgages, or HECMs (home equity conversion mortgages) were created specifically to allow for retirees like yourself to tap into the equity of their homes to help supplement and enrich their finances. Neither you nor your heirs can ever be held liable for more money than the appraised value of the home at the time you vacate it. After both of you are gone, even if the amount you’ve drawn out of the reverse mortgage line of credit exceeds the value of the home,  your children will be free to give back the house to the lender and walk away, obligation-free. Should they decide to keep ownership of the home, they would need to buy it back by paying only 95% of the mortgage balance!

A reverse mortgage is all about using your own assets to enhance your own retirement lifestyle.

https://mutualreverse.com/david-garrison

Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).

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.orgEqual Housing Lender

HOME EQUITY CAN TURN AN EMERGENCY INTO A TRANSITION

While the plan had always been for each of you to work at least up to the social security “normal retirement age”, your husband was recently notified (at his age 64) of an involuntary severance –  effective next month! The company will continue to pay his salary and benefits only through the end of the third quarter of this calendar year, you’ve learned. While your own job seems secure, and while you could add your spouse to your own health plan, this downsizing is obviously going to mean a significant cut in household income. Thankfully, you have no consumer debt and very little mortgage debt (the plan, up until now, had been to have your home fully paid for in time for your own retirement two years later than his).

Still not totally recovered from the shock of the job loss, your husband has already begun to look for alternate employment. While he is confident he has four to six good years to offer a new employer, you are afraid the prospects of his earning anywhere near his current income, much less with health insurance benefits included, are dim. 

Unfortunately, downsizings are all too common these days, but it sounds as if you have several positive factors going for you, including your lack of consumer debt and your own health benefit plan through your employer. In addition, your husband appears confident that he will find a way   to continue generating income.

One path to consider is tapping into your “housing wealth” in the form of a reverse mortgage line of credit. The equity you have built over the years will first be used to pay off the remaining debt; the remaining equity would continue to grow at the same rate as that being charged on the mortgage loan. You would experience immediate relief in the sense that no monthly mortgage payments* would be needed, and that should be helpful until your husband once again is earning a paycheck.

In short, your home equity can help turn what is now “an emergency situation” into just another of life’s transitions.

https://mutualreverse.com/david-garrison

Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).

*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.orgEqual Housing Lender

After retiring several years ago, you relocated from Nevada to Indiana to be closer to family members. At the time, you made the decision to rent an in an upscale apartment community, choosing not to rush into a real estate purchase. As a widow, you needed time to get settled into your new location.

Now, however, you’re considering becoming a homeowner again, with fewer restrictions about outdoor cooking and more space to entertain. Within your growing circle of friends are a couple of Master Gardeners, and you’re considering getting back into growing your own produce again and experimenting with gorgeous flower varieties. 

Both your children, who are now within short distance are doing quite well financially and are not currently in need of your help, although you have been making meaningful gifts to the grandchildren. As you choose a home, it will be with an eye to aging in place”. Since, despite the fact that Indiana home prices have been on the rise, everything is far less expensive here than our West, and you have enough money to make a substantial down payment; the rent you’ve been paying will certainly suffice to make monthly mortgage payments* and keep up with the maintenance. (Understanding that some adaptations may be needed for comfort and safety as you age, you are going to consider only ranch and one-story homes that have been kept in excellent condition.) 

In acquiring your “forever home”, consider financing the transaction through a reverse mortgage HECM for Purchase. This would allow you to purchase the home (at your age, a down payment of approximately 60% of the purchase price would be required, with the balance being financed and no monthly mortgage payments* ever being required). In fact, the dollars you now use to pay apartment rent could be used, going forward, for your own lifestyle needs. 

You’ve gone from owning to renting; now, with the help of a reverse mortgage, you could complete the cycle, making your new home a garden showplace.   

https://mutualreverse.com/david-garrison

Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).

*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. **Please consult a tax specialist. 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.orgEqual Housing Lender

SNOWBIRD WANNABES CAN TAP HOUSING WEALTH 

Prior to your retirement (yours three years ago, hers one year later) the two of you had resolved to remain in your home rather than relocating to a nearby retirement community. Since that time, you’ve hired professionals to bring the house itself “up to speed” – (new roof and HAVC, walk in tub), and are satisfied that, barring unexpected health challenges, you’re ready to spend the rest of your lives “back home in Indiana”.

This spring, however, as you’ve watched friends and neighbors return after spending the winter in sunny climes, you’ve begun to ponder becoming “snowbirds”. (You’re considering the purchase of a summer place in the southeast U.S, which would also put you near your daughter and her family).

A recent review of your finances shows that you do have sufficient resources to make a meaningful down payment on a second property, and even to furnish it modestly. An outright purchase, though, would mean overhauling your investment strategies to an uncomfortable extent.

It appears as if a HECM (Home Equity Conversion Mortgage) might offer a solution. Backed by the Federal Housing Administration (FHA), a HECM refinance on your current residence could create enough cash proceeds, in addition to the funds you’d planned to use for the down payment, to enable you to purchase a second, smaller home. 

With the understanding that you must continue to occupy your Indiana home for at least six months out of every year, and that you’d continue to be responsible for property taxes, homeowners insurance, and home maintenance costs, there would be no obligation to make monthly mortgage payments* on the HECM loan.)

With your primary residence prepped for “aging in place”, your housing wealth can be key to allowing you to “graduate”, along with your neighbors, to “snowbird” status.

https://mutualreverse.com/david-garrison

Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).

*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. **Please consult a tax specialist. 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.orgEqual Housing Lender  

CHANGING COURSE, STAYING ON TARGET 

With your wife’s retirement less than half a year away (she will be 65), you’ve stuck with your plan to have your home totally paid for by the time of your own retirement, scheduled for the end of next year. So far, despite the recent rise in everyday costs of living, you’ve persisted making “oversized” payments, because, without that extra effort, the mortgage would not be retired until the end of 2028. 

Your home itself has been kept in excellent shape; because it is a roomy, ranch style house with no stairs to navigate, you believe the property will remain manageable even as you age. Meanwhile, seeing significant fluctuations in the value of your retirement and other investment accounts, you’ve had to keep “encouraging” each other to stay the course. At least so far, you’ve agreed that the idea of retiring mortgage-free is appealing.

Consider a different way to “stay on target”, yet doing a “course correction”, by replacing the “forward” mortgage on your home with a reverse mortgage. Up until the time of your own retirement, although there would be no obligation to make monthly mortgage payments* at all, you could continue making payments. The big difference – rather than just retiring your debt, you would be converting your housing wealth into a “reserve fund” that would function as a line of credit for future tax-free** withdrawals.

You haven’t mentioned whether your plan was for either of you to apply for social security benefits immediately following retirement. An additional benefit of a reverse mortgage might be that it could allow you to defer social security payments for a number of years, using tax-free** withdrawals to supplement retirement account draws.

You’ve been steadfast in your course to bolster your housing wealth. A reverse mortgage might allow you to “stay on target”, even as you change course in your retirement planning.

https://mutualreverse.com/david-garrison

Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).

*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. **Please consult a tax specialist. 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

A frank estate planning/general financial planning discussion with your two children revealed that, while you hope to spend the rest of your days in the home you and your late wife had purchased almost thirty five years ago, neither of the kids has any interest, after your passing, in either themselves living in the home or continuing to own it as a rental. 

The discussion itself was triggered by the fact that you’ve been evaluating different home remodeling proposals, including the installation of a walk-in tub and a ground floor laundry room (to avoid the need to frequently go down to the basement). You didn’t want to make the place less appealing to younger occupants if the kids turned out to have plans to use it themselves someday.  

Since your plan is to remain in the home for life, a reverse mortgage might turn out to be of great benefit. The very essence of a reverse mortgage is that there are no mandatory monthly payments. If interest payments are not made by the homeowner, the interest is “tacked on” to the loan and the balance continues to grow. There is no “danger” represented by this process, since, with a reverse mortgage, the house itself stands as sole collateral for the loan. Your own liability (and later, that of your estate) will always be limited to the actual value of the home at the time you cease to occupy it. The title to your home remains with you, and you will continue to be responsible for property upkeep, insurance, and property taxes. (Whatever money you receive out of your housing wealth is not considered income, and so those payments are not taxable, and there will be no effect on your Social Security or Medicare benefits you receive. 

Someday, if and when you decide to – or are forced to because of illness or death – move out of the home, you or your estate will need to repay the loan, with your heirs keeping any money left over.

That “frank estate planning/general financial planning discussion” you had served to clarify your plan for the future? A reverse mortgage can help you execute that plan. 

https://mutualreverse.com/david-garrison

Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).

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

ROTH CONVERSION/ REVERSE COMBO HELPS CREATE TAX-FREE LEGACY

With both of you turning 73 later this year, you’re reminded that you will need to take your first Required Minimum Distributions out of your IRAs. Of the belief that future tax rates are likely to be higher than today’s, you also like the idea of creating a legacy for heirs that has no tax burden attached.

The issue is that, although your income from speaking engagements  plus your combined pension and Social allow you to maintain some cash reserves, you are in no position to fund the one-time, six-figure tax liability that would result from converting those traditional IRAs to Roths.  Alternatives you are considering include a “staged” conversion of funds to Roth IRA accounts or perhaps converting your account but not hers. Of course, you understand that, unless you were both to do a total one-time conversion, there would still be the need to take RMDs on whatever balances remained in either or both traditional IRA accounts..

In contemplating different approaches to Roth conversion tactics, consider your housing wealth in the mix. Using a reverse mortgage “standby line of credit”, you can tap your own home equity to the extent needed to pay tax on one or both Roth IRA conversions.

Importantly, moving forward, you would have no obligation to make monthly mortgage payments, continuing to be responsible for upkeep and insurance. Since reverse mortgages are non-recourse loans, both you and your heirs would be protected from ever being “upside down” (owing an amount greater than the value of the home itself). Meanwhile, the Roth conversion would help provide that no-tax-burden-attached legacy for your heirs.

https://mutualreverse.com/david-garrison

Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).

Please consult a tax advisor. 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.orgEqual Housing Lender

KEEPING HOUSING AND INVESTMENT WEALTH IN THE BALANCE

Following your retirement (yours six years ago, your husband’s a year later), you used a little over half your reverse mortgage line of credit to “outfit” your home for the long haul of “aging in place”. With that big project completed, you have not found the need to tap the line of credit any further. 

Meanwhile, given the crazy ride in the investment markets over the past few months, you are starting to be concerned about the possibility of further drops in the value of your accounts. And while receipt of some higher-than expected consulting “gig” income would have made it possible to “rebalance” your portfolio by adding funds to equities, you’ve decided you’re not comfortable doing that. 

While avoiding any comment on your portfolio allocation strategy, have you considered using the “unexpected” consulting income to “invest” in your own reverse mortgage? Since interest rates on CDs and, money market accounts are still quite low, you might enhance your “fixed income” return by putting the money back into your own “account”, by making voluntary by repayments of your reverse mortgage loan.

As you pointed out earlier, your reverse mortgage has turned your housing wealth into a “revolving line of credit, and making voluntary payments is a way to “grow” the “equity” portion of your overall asset holdings without actually purchasing more stock. (You might also consult your tax advisor about whether you could qualify for an interest deduction if and when you make a large payment on your reverse mortgage.)

Thinking of your total assets (not only your investment assets) as your “portfolio”, you can keep your housing wealth and your investment wealth “in balance”.

https://mutualreverse.com/david-garrison

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.orgEqual Housing Lender