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

Now almost five years into a “three-quarters retirement”, you had been feeling pretty good about the degree to which consistent planning and savings have been playing out in terms of your ability to maintain a comfortable standard of living in retirement. Some part time work along with various community activities have kept you just busy enough. Your insurance has been kept up to date, including a long term care policy, and your home upkeep is where it needs to be (you’re planning to stay in this home for life, and the mortgage will be paid off in three more years.). As a single man with no children, you treasure your independence, as does your companion of many years, who is financially stable in her own right, preferring to continue residing in her own home in a neighboring town.

Your only real (and growing) concern relates to the price increases you’re seeing in everything from gasoline to groceries. While your retirement plan allows for an average annual cost of living increase of 3%, recent price hikes have far surpassed that level. You could take on more your part-time assignments, but do not want to become dependent on an ever lengthening work week.

You’re certainly not alone in your concern. In fact, the authors of a recent USNews article, “Advisors Urge Clients to Plan for Inflation,” observed that “investors didn’t have to concern themselves, as the core inflation rate remained fairly muted while equity markets raced higher. That may be changing.”

One move you might consider is using your housing wealth as an inflation backup plan. Setting in place a Reverse Mortgage Line of Credit on your home will allow you to tap a revolving credit line secured by your own home equity. If and when living costs exceed those anticipated through your prior planning, your will have a supplemental source of funds that can be accessed tax free.

Through careful planning and savings over the years, you’ve succeeded in creating a “raincoat” for your own retirement. With greater-than-anticipated inflation, perhaps your home equity can be your “umbrella”!

https://mutualreverse.com/david-garrison

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

You’ve always been conscious of the importance of estate planning. Now, however, in your late seventies and in the aftermath of a couple of health scares, you’ve begun to discuss and gather information about actual funeral planning. In terms of the funeral and burial costs for both, as well as obituary notices, it seems you will need to set aside at least $25,000-$30,000, since it is important to you to have headstones. (You realize you can affect some savings by entering into a prepayment plan). Health challenges notwithstanding, you believe it is reasonable to hope to continue living in your home for the remainder of both your lives.

Because unfortunately, neither of your children is in a position of financial stability, as part of your end-of-life planning, you would like to cover travel and hotel expenses for them in addition to providing for the funeral costs themselves. At the same time, you do not feel you can set apart that much money out of your own resources for end-of-life planning. You’ve followed up on some of the TV ads about no-underwriting life insurance for covering funeral costs, but are reluctant to commit to monthly premium payments of that size. As “morbid” as your preoccupation with death may seem to some of your friends, you are convinced that putting your plans in order now will allow you to move forward with enjoying the years to come, knowing you’ve made things as easy as possible for family members.

Making end-of-life decisions now is indeed a great kindness to your children, reducing their burden from both a financial and a decision-making point of view. Perhaps a reverse mortgage on your home can provide the mechanism to accomplish the goals you’ve described. Since your intent is to remain in your present home, a Home Equity Conversion Mortgage on your home will provide funds you can use immediately for prepaid funeral and burial expenses, without tapping your savings and investment resources. Alternately (or possibly in addition), you can draw from your line of credit to pay for life insurance. Working with an estate planning attorney, you can set up a burial “trust fund” to allow for paying funeral costs upon your death. Meanwhile, your home equity can provide reserve funding for unforeseen medical costs.

Sounds as if your survivors are going to need your help more than your house, and you’ve very kindly and thoughtfully devoted efforts to providing that help and comfort.

https://mutualreverse.com/david-garrison

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

Starting with assets inherited from parents and grandparents, the two of you have succeeded, through your own endeavors, in building those assets into a significant estate. With no children of your own, you have helped with education funding for nieces and nephews and their children, also contributing to various charities. You live in the inherited “family “castle”, an overly large home on the outskirts of a college town, which you’ve remodeled and in which you’re hoping to spend the rest of your days. According to your current estate plan, upon the second of your deaths, the primary beneficiaries of your estate will be three different charitable organizations, with one of those to inherit the home.

Although the current value of your estate is far less than $11.7 million dollars, like many of your friends, you are extremely concerned about how the proposed estate tax law changes will affect your plans. If you make very large gifts to charity this year and next, for example, and the exemption amount is later lowered, would the gift and estate tax be retroactively applied? Even more important, you are concerned about keeping control of your financial assets in order to maintain your own lifestyle. With no children, you must also be assured of adequate “rainy day” money for healthcare needs throughout both your lifetimes.

A reverse mortgage on the “castle” might offer a solution, with the line of credit serving as your “rainy day fund”, allowing you to move forward with the charitable gifts. Part of your housing wealth could be kept in reserve to cover unforeseen medical costs, and part can be drawn on for lifestyle needs. The interesting aspect of a reverse mortgage is that, to the extent you do not draw down the line of credit, the reverse mortgage includes a growth feature (the untouched balance will increase by the mortgage interest rate).

Having a reverse mortgage “rainy day fund” in place for tomorrow can allow you to go ahead with those large charitable gifts today.

(Note: While this column offers no tax advice, it is worth noting that the Treasury Department confirmed that when exclusion amount drops after 2025, there will be no “clawback” of exemptions. See https://s3.amazonaws.com/public-inspection.federalregister.gov/2018-25538.pdf )

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

Your income has been more than sufficient to keep up mortgage payments of just over $2000 a month. But as retirement draws near (planned for next summer), you’d appreciate being able to erase the monthly payment obligation and use your retirement income to pay for lifestyle luxuries. Liquidating cash reserves and selling a big enough chunk of investment assets to liquidate the mortgage entirely is a plan that lacks appeal because of the tax liability that would generate. Meanwhile, you’re aware of the current “housing boom” will last (several neighborhood homes have sold at substantial premiums, you’ve noted), but doubt that strong demand is going to last. In any event, you’ve decided to remain in your home rather than selling. One move you’re considered is a mortgage refinance (rates have definitely fallen since you purchased the home, and you don’t know how long these lower rates are going to be available).

There’s an alternate plan to consider as a way of taking advantage of the very two factors you’ve mentioned (higher home values and low interest rates) in the form of a reverse mortgage with the purpose of leveraging your home’s equity to pay off the existing mortgage loan. Here’s a general idea of how that might work: Assuming that your home’s value has appreciated to the point of being more than double the outstanding mortgage, your reverse loan would “replace” your traditional mortgage loan, locking in today’s high loan to value via today’s low interest rates. Yes, your home would still be mortgaged; the big difference would be that, going forward, you would be free to choose whether to make monthly (or indeed any) mortgage payments.

With no need to liquidate cash reserves or sell investment assets (or to move), you can take advantage of the twin phenomena you’re noticed – increased home values and low interest rates! Rather than tapping your investment wealth, you’d be tapping your housing wealth as your launch your retirement.

https://mutualreverse.com/david-garrison

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

The original plan had been of the “till-death-do-us-part” variety, yet here the two of you are, both well into your sixties, on the cusp of one of those amicable “gray divorces”. You’ve pretty much agreed on how to divide up the furniture, the office and sports equipment, as well as the joint cash and investment accounts. You each receive pension income and both of you will, in a year or two, qualify for social security benefits. What’s more, you both plan to continue running (at least for a while in your case) your respective home-based consulting practices.

The sticking point in the “master plan” appears to be the residence. While your home holds many memories for the two of you and for your now adult children, neither one of you feels willing, or even able, to shoulder the upkeep of this big a property simply in order to host the children and their offspring on holiday visits. Your spouse, in fact, is talking about moving out-of-state once the divorce is finalized. You, on the other hand, plan to reside within, or at least near, your current neighborhood.

There are two ways in which a reverse mortgage strategy might be of use to you in “divvying up the indivisible”. First, assuming neither of you plans to remain in the current home, list it for sale, then split the proceeds. Meanwhile, you apply for approval for a HECM for Purchase (Home Equity Conversion Mortgage) loan, which will be used towards a home or even a condominium of your choice. With a significant portion of the purchase price covered by the reverse mortgage, plus no monthly mortgage payments to make, a large portion of your share of the proceeds from your current home can go towards supporting your lifestyle going forward.

Should you decide, after all, that you’d prefer to spend your once-again-single future staying put, once the divorce is finalized, you might apply for a reverse mortgage on this home, relieving yourself of monthly mortgage payments while preserving the homestead for those visits from the kids and grandkids.

Divvying up a home during divorce? A reverse mortgage offers options!

https://mutualreverse.com/david-garrison

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

According to experts, it’s now easier – physically, financially, and emotionally – to pursue a cosmetic surgery treatment than ever before. The same might be said for home improvements. Whether you’re updating indoor or outdoor features of your home in order to maintain its market value, or simply preparing your environment to be more aging-friendly during retirement, a reverse mortgage is one strategy that can help you afford those home projects.

After checking out the cost of various retirement community living options, you realized that you cherish the memories created in your own home. Like the growing number of other seniors and soon-to-be seniors, you’ve decided to stay put, ready to check out ways to make your home safer and more functional as you contemplate the years ahead .By implementing home modifications, you want to be able to maintain your independence, and even, in the long run, save a substantial amount of money.

Outdoors, roof repairs and replacements are one important use of the funds released through a reverse mortgage. Indoors, kitchen and bathroom renovations are common. There are now contractors who are specifically trained to do aging in place home remodeling, certified through the National Association of Homebuilders.

A reverse mortgage can be used to tap into the equity in your home to finance those home “renos” so important to the success of your retirement planning. Renovations offer a double benefit: Not only will you have a safer, more convenient environment in which to spend your retirement years, the home’s market value will potentially increase. That’s a true win-win!

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.