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

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

By next spring, when you will both be qualified to receiver social security benefits, you’re going to retire from long careers in education. You’re justifiably proud of the fact that you’re close to paying off your home, have no credit card debt, and have each accumulated a nice 403b nest egg (you plan to roll these into self-directed IRA accounts). While neither of you is a “stock trader”, you have been comfortable working with your financial advisor to choose and periodically rebalance your portfolios.

You will each be receiving a pension, but that will not totally support your needs. As you contemplate using both social security benefits and investments to augment your cash flow, you are more than a little concerned about depleting your assets too quickly, particularly since you will no longer be making those contributions through payroll deductions.

Consider “reversing the sequence” by using housing wealth for support. In other words, with a reverse mortgage line of credit, you could defer tapping your retirement portfolio, perhaps for decades, instead supporting your lifestyle with a combination of social security benefits and periodic, tax-free “draws” out of the equity you’ve build up in your home. Meanwhile, you’d continue managing your rollover accounts. Because even short term drops in the value of your investments at the start of retirement could be devastating, you’d be allowing those assets time to build.

Using the same logic, you might explore using a reverse mortgage to defer Social security benefits for one or both of you. Delaying Social Security benefits by just five years can increase benefits by as much as 30% for the rest of your life!

With three potential sources of support (pension, Social Security benefits, and investment draws), it might be smart to “reverse the order”, deferring Social Security and investment asset liquidation, while using your housing wealth as a main source of support as you begin your retirement

*Not Intended as Tax Advice. Consult a Tax Specialist.

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

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

As an only child, daughter of a mom who was widowed 2 ½ decades ago, you were always taught to be independent and financially responsible. Now married with children of your own, you maintain close ties with your mother, who lives in the family home less than an hour away. While the two of you never directly discuss either her finances or yours, you sense that Mom is just barely managing to cover her lifestyle expenses.

Mom has shared with you her desire to remain in the home for the rest of her life (as opposed to moving into a retirement community). In order for her to be safe, however, you realize certain modifications need to be made to the house itself. You are aware that Mom has aLong-Term Care insurance policy, which she has so far not needed to use.

You are not in a position to offer meaningful financial help; in any event, your mother would be hurt by such an offer. A reverse mortgage might provide a solution, allowing your mom to cover the costs of the remodel and to supplement her income as well. Since she would be using “her own” housing wealth, your mother’s desire to operate independent of your help would be satisfied.

With a reverse mortgage line of credit, your mother could take a one-time “draw” on to make the needed modifications to the house. Then, through either periodic, tax-free “draws” out of the equity she’s built up in your home, or through converting the mortgage into a lifelong “annuity” payout, she would supplement her monthly income.

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

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

Before your wife of almost fifty years passed in 2020, the two of you had planned to remain in the home you’d occupied for almost four decades. Together, you had begun exploring the possibility of taking out a reverse mortgage, but the process had to be sidelined while you dealt with hospitalizations and treatments. Your intention continues to be occupying the residence for the remainder of your own life.

While right now you are well able to financially support your own lifestyle, you like the idea of having a reliable and readily available cache of money from which to draw in the event of unexpected opportunities or needs. Both your children have homes of their own, but your one big hesitation about the reverse mortgage is that you don’t want to leave any debt or hassle for them in settling your affairs.

When a reverse mortgage borrower dies, the lender will typically explain to the estate representative different options for paying off the loan. If the heirs to your home are your two children, they will have the choice of: selling the property to pay off the reverse mortgage balance, or to pay off the loan with a new mortgage.

One possible way to avoid passing on any debt obligation to your heirs is buying a whole life insurance policy. Your heirs could use those insurance proceeds to pay off any balance remaining on the reverse mortgage without needing to sell the property should they make the decision to continue to own it.

Your housing wealth would thus have come full circle, there to fund your own unexpected opportunities or needs, yet preserving your children’s power of choice about their childhood home.

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