CONSIDERING A REVERSE MORTGAGE? PURPOSE TRUMPS TIMING
After much soul-searching (plus attending a number of seminars on the subject of reverse mortgages and the pros and cons of aging in place), the two of you are seriously contemplating taking out a reverse mortgage on your home. While you have done some updating of your home to make it more suitable to your everyday comfort, there are still some modifications that would make “aging in place” feasible.
Over the past few months, you noticed all the news comments about the Fed having dropped interest rates, increasing the buying and selling of homes; you’re not sure how specifically that applies to your situation. You’re locked into the rate you’re paying on the four remaining years on your existing mortgage, but on a new mortgage, the lower rates might prove an advantage.
In your discussions about reverse mortgages, your wife, still in her early seventies, is naturally worried about managing a complex transaction on her own should you die first (you are in your early eighties). At the same time, the stark reality is, were you to die first, without your Social Security benefit, she would have difficulty keeping up with living costs.
The “truth” about “interest rate timing” when it comes to investments – or mortgages – is that we don’t know. Yes, rates today are lower than they have been, and no, your current forward mortgage rate has not been lowered. In a reverse mortgage, future interest rates will impact two elements of the arrangement: the amount of the loan for which you qualify, and how much you’ll be charged in interest. The important difference (between your current forward mortgage and reverse mortgage funding) is that future rises in interest rate would benefit you – because the un-borrowed portion of your equity would grow at the same rate as the interest being charged on the loan balance.
Not only would the line of credit enable you to do the remaining updates on the home, but, should you predecease your wife, causing her to lose your social security benefit; the equity in your home would be a needed resource.
When it comes to a reverse mortgage (just as is true for most major life choices) — purpose trumps timing.
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.org
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