The past three years have, unfortunately, not been good ones for the two of you. Although you had generally been very prudent about managing your finances, you were forced into taking retirement years earlier than planned, because your employer suffered major setbacks due to the pandemic. (You had originally planned to work full time until age 70. Instead, unable to find full time replacement work, you have been working part time for a local merchant.) Your wife, meanwhile, suffered through several periods of ill health, further reducing the household income. Health wise, things have taken a turn for the better, but you are beginning to be have serious budgetary concerns and have been forced to make only minimum payments on your credit cards. So far, you have been able to totally abstain from touching either of your retirement accounts (your SEP from the company and her IRA). With interest rates unlikely to be lowered anytime soon, you realize that the timing is not advantageous for taking out a second mortgage on your home (the first mortgage has just three more years to go). Meanwhile, your adult children, while extremely loving and caring towards you, are not in a position to be of help..
Amidst all the setbacks, you’ve been able to build equity in a very important asset – your home. Now, establishing a reverse mortgage line of credit might be a pathway for handling your obligations, including both the existing mortgage balance and the credit card debt. The most threatening aspect of your current situation is, in fact, the credit card debt, because, should interest rates continue to rise, not only with those minimum payments be more, your credit rating might be negatively affected. With a home equity line of credit reverse mortgage, in contrast, so long as your income is sufficient to cover property taxes, upkeep, and homeowners’ insurance on the home, you would be able to use the proceeds of loan to eliminate both your first mortgage obligation and the credit card debt, vastly improving your monthly cash flow. Importantly, no monthly payments are ever required as long as loan terms are met.
Yes, a reverse mortgage, like your credit cards and like your existing “forward” mortgage, IS a form of borrowing. Yet, prudently handled (as you have apparently handled your finances up to this point in your lives), you may find it to be much more manageable form of debt.
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