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

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

April 26th, 2022

After your father’s death three years ago, you moved your mother into your own home, remodeling a bedroom/bath/sitting room for her on the lower level of your house (using the proceeds from the sale of her condo). Over the course of these three years, you’ve hired various part-time senior care assistants, which worked out well for awhile; in fact your mother insisted on covering those costs herself. 

Recently however, to ensure her safety, you were forced to move Mom into a nearby assisted living facility where the availability of care is more consistent. Thankfully, your mother owns a long-term care insurance plan which should cover (after the six month “waiting period”), around half the monthly fee for the next few years. Still, you’re concerned about depleting your own retirement assets.

While you might consider renting out the space in your home that you created to house Mom, you might also consider using the equity in your home as a source of backup funding. As needed, you would use withdrawals from the line of credit to help pay for Mom’s assisted living costs. Of course, once Mom’s Long-Term Care benefits kick in, more funds might not be needed for awhile, allowing the unused portion of your line of credit to accrue interest. Until and unless you move out of the home, there will be no obligation to make payments on the loan.

A reverse mortgage is one way to “assist” with the costs of assisted living for Mom!

https://mutualreverse.com/david-garrison/

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

April 19, 2022

Following a few months spent “window shopping” in this frenzied real estate market, you’ve made the decision to retire in place. Following a combination of several do-it-yourself and contracted renovations, the “new interior” of your home feels too comfy to leave. However, you want to create a master bedroom downstairs. Also, while some shrubbery and flower beds were added for “curb appeal” preparatory to a sale, now that you’re going to stay, you’ve decided to do a major “Property Brothers”-style outdoor reno. You envision new walkways, stonework, and a fountain. 

A small portion of the funding can come from the money you saved by not moving, but you’ll still need around $40,000. Thus far, you’ve steered clear of borrowing, but don’t wish to deplete liquid assets any further, and would prefer not to tap into tax-deferred retirement accounts. 

Now that you’ve made the decision to “retire in place”, using the equity in your home to fund the internal and external renovations might make a lot of sense. A reverse mortgage set up as a line of credit will allow flexibility, so that you’re using the money as needed through the different stages of interior and external home improvements. 

A reverse mortgage can help create beautiful surroundings from the outside in!

https://mutualreverse.com/david-garrison/

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

April 12th, 2022

When it comes to sharing cash or assets with your children, the two of you have always agreed – and made clear to your children – that once you got them through their schooling, they would be expected to manage their finances on their own. Upon the second of your deaths, of course, you’d arranged for your three children to inherit (equally) whatever wealth remains. You have grandchildren, but the plan was for each set of parents to provide for their own offspring in their own way. Unlike the case with many of your friends and their children, you were able to discuss all of this openly with your kids, making your intentions clear. 

You are far from wealthy, but with your home paid off and in good physical condition, you’ve been able to manage well on retirement plan income and social security, hoping to remain in your home for the rest of both your lives. Everything appeared to be going according to plan – until, suddenly, it wasn’t.

Your oldest daughter’s husband was killed in a traffic accident at the end of last year, and, after quitting her own job, your daughter is making valiant attempt to save the small business they’d owned together. Meanwhile, there are junior high-school aged children at home, one of whom is in need of therapy. It is plain that this daughter needs financial help now.

Rather than tapping your own retirement assets, consider using your housing wealth to provide the needed help for your daughter and grandchildren. Since your plan is to “age in place”, a reverse mortgage line of credit will enable you to “draw down” tax-free loan proceeds which you can use to provide the financial assistance your daughter needs today.  There will be time later to discuss if and how you’d want to adjust your estate plan to accommodate this “early legacy” to one child.

When “later” arrives earlier than planned, a reverse mortgage can provide a “legacy” needed now! 

https://mutualreverse.com/david-garrison