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