“Get ready to discard old notions of who a needs-based borrower really is,” comments blogger Shannon Hicks, explaining that house-rich, very cash-poor retirees used to be the ones who turned to reverse mortgages, making ends meet by eliminating their monthly mortgage payment. In contrast, today’s retirees, she explains, may have six-figure – and better – retirement portfolios from which they take monthly draws to supplement their Social Security benefits.

All well and good, but couples like the Wilsons, Hicks says, are finding that inflation has increased their monthly expenses by 11% (their financial advisor has had to break the news that their savings are likely to last only another nine years). A reverse mortgage for the Wilsons will indeed be “needs-based”, Hicks observes, but not because the couple is devoid of assets. Inflation is simply eroding their buying power and causing them to feel “the pangs of need”.

Actually, what the savviest financial advisors are coming to realize is that housing wealth can be used to satisfy a variety of both “wants” and “needs”, even for clients whose monthly income is more than sufficient to keep up with the rising monthly costs. Reverse mortgage proceeds have been used to finance the purchase of a sunny-climate winter home, for charitable bequest, for business launches, grandkids’ education, even for new starts following a “gray divorce”.

Financial advisors should most certainly, “get ready to discard old notions about who a needs-based borrower really is”. On the other hand, it’s high time to recognize that reverse mortgages represent financial tools well worth affluent clients’ consideration to satisfy some of those not-their-fathers’ needs-based “wants”..

https://mutualreverse.com/david-garrison

David Garrison
Home Equity Retirement Specialist
NMLS # 1595194
Serving the State of Indiana
p (317) 644-2595 c (765) 516-0130
e [email protected]

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

The two of you have always done things just a little bit differently. While most of your friends have owned homes, with some now relocating to retirement communities, you’ve always rented, moving from place to place to accommodate various long-term corporate consulting assignments. Now, as you’re preparing to retire (you’re 67 and 68 years old), you’re planning to settle “back home in Indiana”, ready to purchase a suburban home where you can putter in the garden, pursue hobbies, and host parties. You do not have children, but there are nieces and nephews whom you’d enjoy having visit.

You’ve saved enough over the years to finance a one-time cash purchase, but probably not enough to do the remodeling and adaptations you envision. In any event, you’re not comfortable cashing in retirement plan dollars, so a mortgage will need to be considered. And, while you had hoped to put work-related travel behind you, it’s reassuring to know that if needed, you can accept certain consulting assignments if costs mount up.

Just as you seem to have done things “in reverse” as compared with your friends, moving “in” to retire instead of “moving out”, you might consider a reverse mortgage to finance the purchase of your “retirement home.” You’d make a down payment (perhaps 50-60% of the purchase price), using the HECM- for- purchase to finance the closing costs and the remainder of the price. What might prove particularly advantageous is that you would not be obligated (although you might choose to) make mortgage payments, freeing up dollars to gradually improve the property to your liking.

You’ve always been comfortable doing things “differently”, and as retirees, you can now take advantage of a different way of financing a first home. 

https://mutualreverse.com/david-garrison

David Garrison
Home Equity Retirement Specialist
NMLS # 1595194
Serving the State of Indiana
p (317) 644-2595 c (765) 516-0130
e [email protected]

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

Now, your second-oldest grandchild (your daughter’s son) will be applying for college. You’ve  learned that, effective for  the 2024-2025 school year, grandparent-owned 529 accounts will no longer negatively impact  a grandchild’s financial aid. The more you have been learning about 529s, the more excited you are to open a plan for each of your three grandkids (including the one already in college).

The 529 feature you like best is that you can continue to control the accounts, and can even change the beneficiary if later one of the grandkids were to drop out of college.  We could even use the money for ourselves in case of an emergency.  Something you hadn’t known before is that, as joint tax filers, you are allowed to contribute as much as to $150,000 in one shot to each of the 529 accounts. While you don’t think you’re in a position to do quite that much, you would like to start a 529 for each of the two younger grandkids with $50,000 apiece, and one for the oldest grandchild with $25,000. You like the idea of reducing your estate by $125,000, yet still have access to the money in case your own needs change. Doing advance funding by selling assets, might generate a substantial tax bill from selling investment assets.

Rather than selling investment assets to fund the 529 College Savings accounts, consider using your housing wealth by entering into a reverse mortgage, using a portion of your line of credit to advance-fund the College Savings accounts. The unused portion of your loan will continue to grow, in a way providing you with two “fallback” options (the money in the 529 accounts and the remaining equity in the home).

As you work through the details of your plan with your financial planner and tax advisor, you’ll really appreciate the fact that the recent tax law change concerning 529 plans, combined with smart use of your housing wealth, can produce some very good results for both you and your grandkids.

https://mutualreverse.com/david-garrison

David Garrison
Home Equity Retirement Specialist
NMLS # 1595194
Serving the State of Indiana
p (317) 644-2595 c (765) 516-0130
e [email protected]

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

Just four short years ago, when you both retired from full-time careers, you thought you had a foolproof plan in place for managing regular expenses and keeping up with the maintenance of your beautiful home and grounds. The plan was to postpone social security benefits for one of you, taking a very disciplined approach to withdrawals from IRA and from your investment accounts. You retired debt-free with the exception of your mortgage, which has eight years to go. 

Now, like so many others, you are feeling the financial effects of the pandemic, with rising everyday costs and the two-year hit to your part-time “gig” income. While your consulting practices are being rebuilt, you’re beginning to feel more than a bit insecure about the monthly cash outflow.  

It sounds as if you’ve done a good job handling your finances, but perhaps it’s time to explore the option of tapping into your housing wealth. Just as you’d ask your plumber to install a check valve in the outlet of your water heater to prevent additional heat loss when the pipes are not in use, a reverse mortgage will help stem the drain the monthly mortgage payment is putting on your finances. 

The reverse mortgage proceeds might well be sufficient to pay off your existing mortgage, thus eliminating the need for a monthly payment. Even after closing costs, there could very well be a line of credit available, the unused portion of which will grow at the same rate your mortgage balance accrues interest. Most significantly, your improved monthly cash flow will help you keep up with the now higher costs of living, buying you time to build back your part time income.

Meanwhile, a reverse mortgage will help put a “check valve” on cash outflow.

https://mutualreverse.com/david-garrison

David Garrison
Home Equity Retirement Specialist
NMLS # 1595194
Serving the State of Indiana
p (317) 644-2595 c (765) 516-0130
e [email protected]

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

As you enter your 70s, you’ve been considering converting your IRA account to a Roth before being obliged to take – and pay tax on, required minimum distributions. The size of the tax bill that would immediately come due has thus far scared you off making that conversion move.  Now, however, with the market significantly down, you’re reconsidering. Not only will the tax bill itself be less because of the account being down, you’re convinced income tax rates are likely to be rising sooner rather than later. Since your qualified accounts represent the bulk of your invested assets, for you tax planning is especially important.

The wisdom of the conversion itself is not up for question with you. If you can get over the hurdle of funding the immediate tax bill, the conversion will be very much in line with your overall estate plan. You’re not married, and the assets in the IRA are set to pass to nieces and nephews, who would be able to allow inherited Roth accounts to grow. Meanwhile, however, the tax bill on the conversion poses a big challenge.

The wealth you’ve accumulated in the form of home equity might provide the funds needed to pay the tax on a Roth conversion. Establishing a reverse mortgage loan will give you access to funds to cover the tax, allowing any unused portion of the reverse mortgage revolving line of credit to grow.

Housing wealth can help make the “pain” of a Roth conversion bearable.

https://mutualreverse.com/david-garrison

David Garrison
Home Equity Retirement Specialist
NMLS # 1595194
Serving the State of Indiana
p (317) 644-2595 c (765) 516-0130
e [email protected]

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

After toying with the notion of moving to a smaller home, the two of you have decided to stay put. In the recent ‘hot” real estate market, you knew, the profit from selling might have liquidated your mortgage debt and still enabled you to afford the new purchase. Still, you’re both fond of the neighbors and the neighborhood, and your final conclusion was that the energy and expense of relocating would be better channeled into a couple of trips or cruises.

At the same time, with each of you employed on only a part-time basis (you both called an end to a full time professional career five years ago) and the shakiness of the investment markets, you’re finding the mortgage payment somewhat of a drain on your retirement finances.  But, with interest rates on the rise, though, refinancing hardly makes sense.

You might look into “exchanging” your forward mortgage for a reverse mortgage, with the immediate advantage being that there will be no obligatory monthly payments. In a sense, your housing wealth will be supporting your lifestyle. Depending on the size of your current mortgage loan, the equity built up in your home might be enough to eliminate the first mortgage debt and still allow for a reserve fund that can be tapped for other needs.

By shifting “gears” from Drive to Reverse, you can turn off that monthly mortgage payment and enjoy your neighborhood – and your travels.

https://mutualreverse.com/david-garrison

David Garrison
Home Equity Retirement Specialist
NMLS # 1595194
Serving the State of Indiana
p (317) 644-2595 c (765) 516-0130
e [email protected]

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

May 17th, 2022

Five years ago, having made the decision to spend the rest of your lives in your home,  you used just under half your reverse mortgage line of credit to remodel the residence, adding a downstairs master bedroom with an adjacent a walk-in bath.

Meanwhile, as you work to “rebalance” your investment portfolio, reducing the allocation to stocks and increasing holdings in “fixed dollar investments”, you’re considering “investing” in your own reverse mortgage by making voluntary repayments.  Since interest rates on CDs and, money market accounts are still quite low, you figure you can come out ahead by putting the money back into your own “account” at your reverse mortgage.

Since you chose to access your housing wealth though a line of credit (as opposed to a fixed monthly distribution), and you have unused funds in your line, your credit line is growing over time.  You’ve correctly understood that making voluntary payments is a way to “grow” your home equity. 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.

You are discovering that your reverse mortgage has turned your housing wealth into a “revolving line of credit” that you can use for many purposes, including rebalancing of investment asset categories.

In a way, you’re learning, your voluntary reverse mortgage payments can stand in for dollar portfolio picks.

https://mutualreverse.com/david-garrison

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

May 10th, 2022

There’s never a good time for bad things to happen, and unfortunately, just as the two of you were trying to cope with retirement decisions, one of your children needs your help. Your granddaughter is very ill and your daughter needed to quit her job in order to take her for ongoing treatments in a hospital center in another state. In your late sixties, the plan was for you to both retire at the end of 2023 (at which time your home mortgage would be fully paid). The new plan is for you to request an unpaid leave of absence so as to help supervise the other two grandchildren. In order to make up for the six month income deficit (since you don’t want to start social security benefits before age 70), you will probably need to use up liquid reserves and then begin to tap your retirement savings.

Consider using the “reserves” you’ve been able to build up in your property, by taking out a reverse mortgage loan. The reverse mortgage can help relieve the immediate financial pressure and free up funds to tide you over during the unpaid leave period. The reverse mortgage “line of credit” will also act as a buffer, enabling you to offer help to your daughter while at the same time helping support the two grandchildren who will be under your direct care. 

While your daughter is with their sister out of state, those housing wealth reserves will help “buy time” for you and your husband to adjust your retirement plans until the future becomes clearer.

With a reverse mortgage, your home equity can turn into a parental rescue plan.  

https://mutualreverse.com/david-garrison

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

May 3rd, 2022

Although the two of you had done a lot of carefully planning leading up to your retirement four years ago, the unusually steep rise in the everyday costs of living are beginning to throw you for a loop. Neither of you has an employer pension, but until recently you’ve been well able to manage your living costs with a combination of Social Security benefits, regular portfolio draws and a couple of part time consulting gigs in each of your professional fields.

Having decided to remain in your home, you had, prior to retirement, replaced the HVAC system, put on a new roof, and had some interior remodeling done, all of which has been paid for. Your cars are both in good shape, so it’s the food, heating/cooling, and gasoline costs that are starting to take their toll. Your children are both financially stable, so helping them is not a concern.  After having worked so hard to achieve your debt-free status, you feel forced to consider a home equity line of credit in order to avoid relying on credit cards for everyday needs. Of further concern is that your financial advisor told you that many banks are no longer even offering Home Equity Lines of Credit. (HELOCs)

A reverse mortgage may be a way to help cover your retirement expenses by borrowing against the equity you’ve built up in your home. Unlike a home equity line of credit, there will be no payments required of you so long as you continue to live in your home – you will be using your own “housing wealth” to help cover the increased costs of food, heating/cooling, and gasoline. There are no income requirements to quality for the reverse mortgage financing, and, just as you take “draws” from your portfolio, you can take “draws” from the equity built up in your home.  

Home equity can’t cancel out the fact that the present state of the economy is putting pressure on your carefully made plans, but a reverse mortgage may serve as something of an  antidote.

https://mutualreverse.com/david-garrison