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173: Using a reverse mortgage to offset portfolio equity with debt


 A longtime believer in asset allocation in investing, you have been “in charge” of guiding the choices in your wife’s 401K (she is still working), as well as in your own SEP-IRA account (you continue to generate modest income as a self-employed metallurgics consultant), as well as in your jointly owned portfolio.

While 2023 turned out to be an excellent year for stocks, you can’t help but worry about the near future and the effects the world unrest along with upcoming election turmoil might have on stocks, at least in the short term.  You’ve begun to make some shifts in the two qualified accounts, but now realize the top-heavy issue in the jointly owned account is  harder to fix without generating significant taxable gains.

Without in any way attempting to offer either investment of tax planning advice, we’d like to suggest you consider your own housing wealth to be an important element in your asset allocation planning. Assuming that your intention is to continue living in the home for the foreseeing future, you can apply for a HECM reverse mortgage, set up as a line of credit (which would significantly increase the “fixed income” portion of your allocation strategy. (The unused portion of your home equity would be credited with growth at the same rate of interest as that being charged on the portion that represents borrowed funds.)

Consider bypassing the tax ramification of an asset allocation rebalance using a reverse mortgage balance..

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).

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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: Equal Housing Lender.