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

As a couple, your careful savings habits leading up to your retirement a year and a half ago have stood you in good stead. Happily, you’ve had sufficient income flow to satisfy your needs without cutting back on spending, and your withdrawals haven’t impacted the satisfying market value increase in your investment accounts.

On the negative side, in the course of preparing your taxes last month, you realized that a good portion of your investment portfolio resides in tax deferred accounts. What that means is that almost all of your regular income is fully taxable. To make matters worse, (an effect that is somehow just now coming to your attention) as a couple, you are what Social Security considers “higher-income beneficiaries”. That means, you now understand, you are each paying more for Medicare Part B. Worse, you’re paying tax on a large portion of your respective Social Security benefits.

Related to all this is a second aspect of your carefully thought-out plan. As the second of you turns 68 (which will happen yet this calendar year) you are planning to take out a reverse mortgage on your home. You envision using the freed-up equity to pay for, over the next few years, a total redesign and remodel of the property (without needing to cut back on your lifestyle expenditures to subsidize these costs). Neither of your two children is interested in ever living in the home, you’ve reasoned, and your desire is to not only beautify and modernize your surroundings, but ensure that it can accommodate your needs as you age into your seventies and beyond./span>

In coordinating the various aspects of your planning, you now realize that tax planning needs to assume more importance. The good news is that when you use the line of credit provided by your reverse mortgage, the money you receive is not taxable and generally generally won’t affect your Social Security or Medicare benefits. Your tax advisor can help work out the details, but a plan to explore would involve taking regular supplemental income out of the reverse mortgage line of credit, deferring (or at least reducing) withdrawals from your tax-deferred investment accounts.

Your reverse mortgage might actually help “reverse” the tax burden on your Medicare and Social Security benefits!

*A reverse mortgage may affect benefits from or eligibility for some government programs such as Supplemental Security Income and Medicaid.

https://mutualreverse.com/david-garrison

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

You’ve been helping people manage their financial decisions for decades. Many of your clients are now in their sixties and seventies, and, needless to say, your discussions with them are focused around different issues from those you talked about ten and twenty years ago. Today, In addition to choosing, monitoring, and rebalancing their investments, your conversations are likely to include health costs, charitable gifts, and estate planning.

Partially due to increased television spots on the subject, you’re beginning to receive serious inquiries about reverse mortgages, and have begun to “study up” on the topic. While you have no intention of promoting any mortgage product, you want to continue offering comprehensive advice relevant to the changing needs of your clients and they enter and progress through their retirement years. For the majority of them, you realize, a significant portion of their wealth is in the form of home equity.

When raising the subject of reverse mortgages with several colleagues from different firms, however, you were taken aback to find a lack of knowledge and, in many cases, a negative opinion. Several labeled reverse mortgages as a very “expensive” option, referring to upfront fees, but were unable to provide you with information about either those fees or the various ways in which housing wealth might solve specific problems clients face. While you want to avoid going deep in the weeds discussing a product in which you have no specialized training, you want to offer answers to client who trust you to follow up on their inquiries and explore solutions to issues they face.

When you as a financial advisor see something in client’s situations that is draining cash flow and you believe a reverse mortgage might serve as a tool, you should certainly recommend they speak with an experienced mortgage broker. Meanwhile, the more you continue to learn about the product and about the different ways to use it, the more targeted and appropriate your advice can be.

* The Financial Planning Association (FPA®) is working on a plan to educate financial planners on the opportunities that reverse mortgages may present as part of a comprehensive financial plan.

https://mutualreverse.com/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

At 73 and 72 years old, you’re juggling a set of decisions that make feel both fortunate and frustrated. The outdoor and interior renovations you’ve planned for your home over the coming fall and winter season are going to cost approximately $75,000; the plan is to take out a home equity line of credit to cover those costs. Your son has agreed to oversee the remodel while the two of you spend nearly half a year vacationing on the West Coast.

You’d like to have an extra $3,000 a month in income over that four to five month period of time. Other than the regular pension and social security income you each have coming in, you’ve established a systematic withdrawal plan out of your jointly owned investment accounts; increasing the draw, you fear, might affect a drain on the portfolio value.

The big dilemma? Your largest single investment holding, which you bought with $15,000 twenty years ago, is now worth more than $700,000. Selling that stock will result in a very unwelcome capital gains tax burden. In fact, part of your estate plan includes having your two children inherit that stock with no need to pay capital gains.

Rather than taking out the second mortgage on your home, consider accessing your housing wealth in a different way. A reverse mortgage on your $600,000 home might enable you to take a cash lump sum, both financing the renovations and generating the additional monthly income during the time you are away from home. Even after those cash withdrawals, there would remain a growing line of credit accessible as needed. There will be upfront costs of establishing the Home Equity Line of Credit, but those will prove small in comparison to the benefit of avoiding – and helping your children later avoid – tax liability on the capital gain.

https://mutualreverse.com/david-garrison

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

A recent discussion with your stepson (a highly successful professional who helps manage your affairs and whom you’ve named as executor of your estate) was centered around the home into which you and his late father had moved some forty years ago. While you hope to reside in these familiar surroundings for the remainder of your life, John made clear that he and his wife have little interest in ever occupying that home.

You also discussed the fact that. in just two more years, you are going to need to begin taking mandatory withdrawals from both your own IRA account and the IRA inherited from your late husband. Those withdrawals are certain to raise your level of federal income tax. For that reason, John is suggesting that you convert at least one of the accounts to a Roth. He’s asked your tax advisor run some Roth conversion numbers for you to consider.

Since your plan is to remain in the home for life, while at the same time your stepson has no interest in ever occupying it, a reverse mortgage might turn out to be of great benefit to you both. The very essence of a reverse mortgage is that there are no mandatory monthly payments. If payments are not made by the homeowner, the loan 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.

Assuming your reverse mortgage loan* replaces a traditional mortgage (also assuming that.you’ve remained in the home for the rest of your life), there could be thousands of dollars of tax deductions available to the estate, since, upon your demise, all remaining loan interest will have been repaid along with the principal. Those deductions could prove of enormous benefit to your heirs, including stepson John, offsetting both estate and income tax potential liabilities. **

Meanwhile, you might time both interest payments on, and withdrawals out of the reverse mortgage to offset Required Minimum Withdrawals from the IRA accounts. Alternately, you might defer the Roth conversion while allowing the interest to build up in the reverse mortgage, then use lump sum interest payments to offset part of the tax owed on the conversion.

* Reverse mortgages require that the homeowner maintain tax, insurance, and HOA fees and are available for the principal residence of homeowners 62 and over. Information shared is intended to be general in nature. Consult a tax professional for advice.

** In order for mortgage interest payments to be deductible, the loan must be categorized as being for the purpose of building, acquiring, or substantially improving your residence. This article is not intended to offer tax advice,and you should follow the guidance of your own advisors.

https://mutualreverse.com/david-garrison

The greatest portion of your investment assets is held in your respective retirement plans, which is one fairly large, jointly held stock and fund portfolio. There would be little problem splitting that account “down the middle”, as your financial advisor has assured you. The only issue is that, in order to have him cede total ownership of the house to you, you would need to part with two thirds of your share of the investment portfolio. Tax considerations totally aside, you are extremely reluctant to do this. After all, it has been you who has dealt with the advisors in selecting and monitoring the portfolio over the past at least thirty years.

Since it has been agreed that you will be the one remaining in the home, tapping into the built-up equity might prove to be the best source of funds for your divorce settlement. Once you are able to document the fact that you are now sole owner of the home, you can draw a lump sum out of the reverse mortgage to satisfy your divorce settlement obligation and still maintain control of the investment portfolio. With no obligation to make monthly mortgage payments, you will be under no pressure to liquidate or transfer investments.

*Not intended as financial planning advice. Please consult a financial advisor. 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.

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

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

At age 67, you’ve just retired and already are experiencing some concern about the Systematic Withdrawal Income Plan you so carefully planned with your advisors. In just the past few months, you’ve begun to see some price escalation in many of the goods and services you use every day. What’s more, you’re hearing differing predictions on the near-term direction of the stock market, and you’re worried that all those carefully prepared projections and charts were overly optimistic in terms of your investments being able to provide you with sufficient income to supplement your Social Security and pension benefits.

Reassuring factors include the Long-Term Care insurance policy you purchased seven years ago and the fact that the mortgage on your home is all but paid in full. Still, given the volatile political situation, you don’t want to chance drawing down your investments now, when you’ve hardly begun this new phase of your financial life.

Consider applying for a reverse mortgage, taking monthly withdrawals out of your line of credit in place of the monthly sell-off of assets in your portfolio. The concept is that, while your portfolio is subject to variations in return, the line of credit is a fixed amount, with growth occurring (that matches the interest accruing) on the untapped portion. If at some future date, your portfolio has grown sufficiently to make you more comfortable resuming withdrawals, you can stop taking money out of your line of credit.

Most important, as unexpected one time need for cash arises, rather than worry whether it’s a good time to sell portfolio assets, you can simply draw cash from your reverse mortgage line of credit

https://mutualreverse.com/david-garrison

* 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.

* Not intended as financial planning advice. Consult a financial analyst

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

After reading an article about the advantages of a reverse mortgage, the two of you are ready to learn more. It seems that using the equity you’ve built could make it possible for you to live out your lives in the home you’ve owned and lovingly cared for during the past three and a half decades. You both feel staying put holds more appeal than moving to a retirement community, but you know some remodeling will need to be done to accommodate your needs as you age.

The two of you have always tried to be organized rather than impulsive when making important decisions, carefully mapping out the steps needed to turn your goals into reality. You know it’s important to consider the long term effects of big financial moves. As you explore reverse mortgage options, you’re wondering which advisors to consult.

Your four adult children have all proven to be fiscally responsible, each making choices that make sense for them and their mates, keep you in the loop, but never asking for your help. In turn, the two of you have not consulted your offspring when making either spending or investment decisions. You’re wondering if a reverse mortgage might be an exception to that practice.

Advisors to consult might include a) Tax advisor – while selling investments or taking retirement plan withdrawals to fund the remodel on your home could generate capital gains tax or even ordinary income, draws on a reverse mortgage are nontaxable. b) Estate planning attorney – your decision to take a reverse mortgage might generate a need to adjust beneficiary designations on other assets or on the home itself. c) Family physician – is your medical prognosis consistent with your desire to “age in place”?

Upon the death of a reverse mortgage borrower (in your case when the second of the two of you dies), the loan becomes due and payable. Your heirs have the right to buy the home,sell it, or turn it over to the lender to satisfy the debt. If you were planning on leaving the home to all of – or any of – your children, it would make sense to talk to them now about the options they will have.

Who needs to talk the housing wealth talk? Whoever can help you make the decision that’s best for you!

https://mutualreverse.com/david-garrison

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

While the years following the death of your wife have been extraordinarily difficult, you have now met a wonderful woman and are planning remarriage. Your original intention was to sell your home and move into a condo; your plan now is to remodel (your fiancée is a decorator)and stay put. You are still working part time (she still full-time) and want to remain in the area. The plan is for her to sell her condo and move into your home, directing the remodel and sharing the costs. However, as you explained to your estate planning attorney, you are not planning to add her name to the title, as you want the home to ultimately go to your one daughter. On the other hand, with a fifteen year age difference between you (at age 60, she is not yet eligible, even after you’ve married, to be a borrower on a reverse mortgage) you want your new wife to be able to stay in the home for the rest of her life should she so choose.

It sounds as if a reverse mortgage, entered into after the marriage, might address a number of the concerns you mention, so you might wish to introduce the idea as you continue your estate and financial planning discussions. Not only might using your housing wealth to finance the remodel avoid the need to make untimely (and perhaps tax-costly) sales of investment assets, there would be no mortgage payments required, again allowing you to devote more of your earnings and assets to your new lifestyle together.

A reverse mortgage would ensure that each of you has the right to remain in the home for as much of your lives as you choose. On the Home Equity Conversion Mortgage contract, you would be listed as the only borrower, while your new wife would be listed as an eligible non-borrowing spouse. Should you pass away while the loan is still active, she would be guaranteed the right to remain in the home, provided she continued to maintain it, keeping up to date with property taxes and homeowners’ insurance. As you begin your new life together, beyond financing the remodel, the reverse mortgage could provide a source of cash for emergencies or for funding future travel or lifestyle costs.

There is one important caveat: a following your death or permanent relocation to a nursing home, your widow would not have access to disbursements from the mortgage.

Meanwhile, during no point in your own life (assuming property upkeep, taxes and insurance were maintained) would your ownership of the home be compromised, and your daughter could remain as the beneficiary of the property. She might decide to sell the home or pay off the loan with a new mortgage.

https://mutualreverse.com/david-garrison

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

With retirement planned for each of you within the next year or two, you’ve been debating whether to move closer to your son and grandchildren on the East Coast or stay in Indiana, closer to your daughter and her family. Both sets of grandkids will be entering or returning to different colleges, so it’s apparent that you’d be unlikely to see very much of them in between holiday gatherings even if you chose to relocate. With both of you in generally good health, your final mutual decision has been to stay put in your comfortable home in the Hoosier state.

Interestingly, in a family discussion about estate planning, your daughter surprised you by expressing an interest in someday inheriting her childhood home, understanding that you yourselves now hope to live in the home for decades to come. While you own a timeshare that could be bequeathed to your son, its value is far less than that of your home, on which you have less than three years of mortgage payments remaining. All these considerations are being weighed as you plan your financial future. (Basic powers of attorney and other documents have already been in place for awhile, along with long term care insurance.)

You might consider a reverse mortgage, perhaps combined with a survivorship whole life insurance policy. First of all, by replacing your forward mortgage with reverse financing, you would no longer need to make monthly mortgage payments and could divert that cash to paying premiums. Survivorship life insurance would pay a death benefit when the second of you has passed away. The insurance could serve two functions: 1. “Equalizing” the inheritances you leave to your two children, with your son receiving the time share, your daughter the home. 2. Paying back at least part of the reverse mortgage loan.

Meanwhile, the reverse mortgage would ensure that each of you has the right to remain in the home for life. After three years have elapsed (when your original mortgage would have been paid off), you could take a “draw” to help pay the insurance premiums. Your estate planning attorney can discuss with you setting up a life insurance trust to implement the plan.

https://mutualreverse.com/david-garrison