SNOWBIRD WANNABES CAN TAP HOUSING WEALTH 

Prior to your retirement (yours three years ago, hers one year later) the two of you had resolved to remain in your home rather than relocating to a nearby retirement community. Since that time, you’ve hired professionals to bring the house itself “up to speed” – (new roof and HAVC, walk in tub), and are satisfied that, barring unexpected health challenges, you’re ready to spend the rest of your lives “back home in Indiana”.

This spring, however, as you’ve watched friends and neighbors return after spending the winter in sunny climes, you’ve begun to ponder becoming “snowbirds”. (You’re considering the purchase of a summer place in the southeast U.S, which would also put you near your daughter and her family).

A recent review of your finances shows that you do have sufficient resources to make a meaningful down payment on a second property, and even to furnish it modestly. An outright purchase, though, would mean overhauling your investment strategies to an uncomfortable extent.

It appears as if a HECM (Home Equity Conversion Mortgage) might offer a solution. Backed by the Federal Housing Administration (FHA), a HECM refinance on your current residence could create enough cash proceeds, in addition to the funds you’d planned to use for the down payment, to enable you to purchase a second, smaller home. 

With the understanding that you must continue to occupy your Indiana home for at least six months out of every year, and that you’d continue to be responsible for property taxes, homeowners insurance, and home maintenance costs, there would be no obligation to make monthly mortgage payments* on the HECM loan.)

With your primary residence prepped for “aging in place”, your housing wealth can be key to allowing you to “graduate”, along with your neighbors, to “snowbird” status.

https://mutualreverse.com/david-garrison

Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).

*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. **Please consult a tax specialist. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.orgEqual Housing Lender  

CHANGING COURSE, STAYING ON TARGET 

With your wife’s retirement less than half a year away (she will be 65), you’ve stuck with your plan to have your home totally paid for by the time of your own retirement, scheduled for the end of next year. So far, despite the recent rise in everyday costs of living, you’ve persisted making “oversized” payments, because, without that extra effort, the mortgage would not be retired until the end of 2028. 

Your home itself has been kept in excellent shape; because it is a roomy, ranch style house with no stairs to navigate, you believe the property will remain manageable even as you age. Meanwhile, seeing significant fluctuations in the value of your retirement and other investment accounts, you’ve had to keep “encouraging” each other to stay the course. At least so far, you’ve agreed that the idea of retiring mortgage-free is appealing.

Consider a different way to “stay on target”, yet doing a “course correction”, by replacing the “forward” mortgage on your home with a reverse mortgage. Up until the time of your own retirement, although there would be no obligation to make monthly mortgage payments* at all, you could continue making payments. The big difference – rather than just retiring your debt, you would be converting your housing wealth into a “reserve fund” that would function as a line of credit for future tax-free** withdrawals.

You haven’t mentioned whether your plan was for either of you to apply for social security benefits immediately following retirement. An additional benefit of a reverse mortgage might be that it could allow you to defer social security payments for a number of years, using tax-free** withdrawals to supplement retirement account draws.

You’ve been steadfast in your course to bolster your housing wealth. A reverse mortgage might allow you to “stay on target”, even as you change course in your retirement planning.

https://mutualreverse.com/david-garrison

Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).

*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. **Please consult a tax specialist. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.org

Equal Housing Lender

A frank estate planning/general financial planning discussion with your two children revealed that, while you hope to spend the rest of your days in the home you and your late wife had purchased almost thirty five years ago, neither of the kids has any interest, after your passing, in either themselves living in the home or continuing to own it as a rental. 

The discussion itself was triggered by the fact that you’ve been evaluating different home remodeling proposals, including the installation of a walk-in tub and a ground floor laundry room (to avoid the need to frequently go down to the basement). You didn’t want to make the place less appealing to younger occupants if the kids turned out to have plans to use it themselves someday.  

Since your plan is to remain in the home for life, a reverse mortgage might turn out to be of great benefit. The very essence of a reverse mortgage is that there are no mandatory monthly payments. If interest payments are not made by the homeowner, the 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. The title to your home remains with you, and you will continue to be responsible for property upkeep, insurance, and property taxes. (Whatever money you receive out of your housing wealth is not considered income, and so those payments are not taxable, and there will be no effect on your Social Security or Medicare benefits you receive. 

Someday, if and when you decide to – or are forced to because of illness or death – move out of the home, you or your estate will need to repay the loan, with your heirs keeping any money left over.

That “frank estate planning/general financial planning discussion” you had served to clarify your plan for the future? A reverse mortgage can help you execute that plan. 

https://mutualreverse.com/david-garrison

Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).

David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.org

Equal Housing Lender

ROTH CONVERSION/ REVERSE COMBO HELPS CREATE TAX-FREE LEGACY

With both of you turning 73 later this year, you’re reminded that you will need to take your first Required Minimum Distributions out of your IRAs. Of the belief that future tax rates are likely to be higher than today’s, you also like the idea of creating a legacy for heirs that has no tax burden attached.

The issue is that, although your income from speaking engagements  plus your combined pension and Social allow you to maintain some cash reserves, you are in no position to fund the one-time, six-figure tax liability that would result from converting those traditional IRAs to Roths.  Alternatives you are considering include a “staged” conversion of funds to Roth IRA accounts or perhaps converting your account but not hers. Of course, you understand that, unless you were both to do a total one-time conversion, there would still be the need to take RMDs on whatever balances remained in either or both traditional IRA accounts..

In contemplating different approaches to Roth conversion tactics, consider your housing wealth in the mix. Using a reverse mortgage “standby line of credit”, you can tap your own home equity to the extent needed to pay tax on one or both Roth IRA conversions.

Importantly, moving forward, you would have no obligation to make monthly mortgage payments, continuing to be responsible for upkeep and insurance. Since reverse mortgages are non-recourse loans, both you and your heirs would be protected from ever being “upside down” (owing an amount greater than the value of the home itself). Meanwhile, the Roth conversion would help provide that no-tax-burden-attached legacy for your heirs.

https://mutualreverse.com/david-garrison

Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).

Please consult a tax advisor. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.orgEqual Housing Lender

KEEPING HOUSING AND INVESTMENT WEALTH IN THE BALANCE

Following your retirement (yours six years ago, your husband’s a year later), you used a little over half your reverse mortgage line of credit to “outfit” your home for the long haul of “aging in place”. With that big project completed, you have not found the need to tap the line of credit any further. 

Meanwhile, given the crazy ride in the investment markets over the past few months, you are starting to be concerned about the possibility of further drops in the value of your accounts. And while receipt of some higher-than expected consulting “gig” income would have made it possible to “rebalance” your portfolio by adding funds to equities, you’ve decided you’re not comfortable doing that. 

While avoiding any comment on your portfolio allocation strategy, have you considered using the “unexpected” consulting income to “invest” in your own reverse mortgage? Since interest rates on CDs and, money market accounts are still quite low, you might enhance your “fixed income” return by putting the money back into your own “account”, by making voluntary by repayments of your reverse mortgage loan.

As you pointed out earlier, your reverse mortgage has turned your housing wealth into a “revolving line of credit, and making voluntary payments is a way to “grow” the “equity” portion of your overall asset holdings without actually purchasing more stock. (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.)

Thinking of your total assets (not only your investment assets) as your “portfolio”, you can keep your housing wealth and your investment wealth “in balance”.

https://mutualreverse.com/david-garrison

David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.orgEqual Housing Lender

While your intention is to continue living at home for the rest of your days on Earth (your husband died almost eight years ago), you realize that, with both your children living in other states, neither is going to want to inherit the house, beautiful as it is, once your own life is over. For that very reason, you are considering transferring half ownership to the kids while you’re still alive. In case some health setback were to force a move to move to some kind of care facility, the children could simply wait for the right time to sell and handle everything. You would not need to concern yourself with “prepping” the property, hiring a realtor, etc.  

An tax advisor or estate planning attorney would probably point out to you that transferring a home to your children during your lifetime (as opposed to naming them beneficiaries in your will or trust) may not be such a good idea. Assuming your home has greatly appreciated in value over the years you’ve owned it, at least under current tax law, if you die while still owning the home, there would be  a “step-up in basis“, avoiding a large capital gains tax liability for your children, an advantage would be lost were you to transfer your home to your children now.

There’s a second reason to avoid giving the home to your children now. You might be deemed ineligible for Medicaid benefits if ownership of the home has been transferred within five years of applying for benefits Medicaid. (You would be seen as having given away assets which could have been used to pay for your care). 

A more viable and flexible plan might be to apply for a reverse mortgage as a way of establishing a source of growing wealth earmarked to go to your children upon your death. Under such a plan, were ill health to force a permanent move out of the home, the children would have six months (plus possibly two ninety-day extensions) to either sell the home or satisfy that loan with their own funds and holding onto the property for as long as they cared to.)

While it may not be practical for your children to be given ownership of your home now, your housing wealth will remain an important part of your legacy to them.

https://mutualreverse.com/david-garrison

Please consult a tax specialist. This is not tax advice. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.orgEqual Housing Lender

With both of you now in your in your mid-seventies, you’ve decided it’s time to move out of your three-story home with elaborate landscaping, into something more appropriate to what the AARP likes to call “aging in place.” You have been contemplating building a home that is more in keeping with your tastes and needs, rather than buying one and are considering one of the newer communities 45-60 minutes north of your present location. 

While you do have liquid funds sufficient to fund a down payment, you’re concerned about the timing of the sale of your present home, not to mention once again taking on the burden of a mortgage.  

With an earnest money deposit, many custom homebuilders will finance the building of a new home until it is ready to for you to occupy. At closing, the money owed the builder will come from a combination of the proceeds from the sale of your present home and a HECM (Home Equity Conversion Mortgage) for Purchase, which is a reverse mortgage on the new home. 

It might well be that you have money left over from the proceeds of the sale of your present home, which can be used for furnishing the new home or adding to your investment accounts. There will be no obligation to make monthly mortgage payments;* if you should choose to “replenish” the equity in the new home, that money will grow at the same rate as that being charged on the reverse mortgage loan.

A Home Equity Conversion Mortgage for Purchase can smoothen your move from  your “good”  to your “best and last” home! 

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.

David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.orgEqual Housing Lender

Recent political and stock market volatility seems to have combined, throwing many of your clients “for a loop”. One retired couple in particular – (for the sake of confidentiality, you refer to them as “Jack and Jill”), are worried that, not only is their portfolio under threat, but that they will now be unable to carry out their plan to escape Indiana winters and  acquire a second  residence in South Carolina.

While all your clients have been conditioned to understand that panic selling of assets is never a good idea, and that long-term positives outweigh short-term volatility, there’s no doubt that , for “Jack and Jill”, making the planned substantial cash withdrawal needed to finance the purchase of a winter home would not be wise.  Proud that their present home has been mortgage-free for years, the couple has been considering  applying  for a line of credit in order to move forward with the South Carolina property purchase, reasoning that such a move would at least avert a monumental “hit” to their investment assets.

One stratagem well worth discussing with your clients is leveraging the power of their own housing wealth in the form of a reverse mortgage on their current home” to help finance their new South Carolina home. Not only are many clients unaware of their options in this regard, but many financial advisors are unaware of the extent of “cash” such a transaction can ‘bring to the table” for homeowners of retirement age who want to – or, who have for medical reasons be advised to – escape Indiana winters.

(As just one example, for homeowners in their 70s, given current interest rates, a reverse mortgage on their current $750,000 home might contribute as much as $260,000 to the purchase of a second home in South Carolina.

Important to understand, given the Jack and Jill situation, no monthly mortgage payments are ever required on a reverse mortgage, provided they maintain their obligations of real estate taxes, maintenance costs, and homeowners’ insurance. Later, should the investment climate turn “sunnier”, any monthly mortgage payments* they decide to make will flow dollar for dollar into a line of credit that will grow at the same rate as the interest being charged on the borrowed equity. 

No financial advisor can assure clients that the investment “climate” is bound to improve. On the other hand, introducing “Jack and Jill”  to the concept of a HECM for Purchase might result in a three-fold benefit – helping  them  escape our Hoosier winter weather while “staying put” – in both their present home and  in their investment portfolio! 

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. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.orgEqual Housing Lender