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#31 Hedging against property value risk through a Reverse Mortgage


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

With all the buzz about the incredibly competitive market for homes in Indiana, you’ve been wondering how long the situation can last. Several homes in your neighborhood have soldwell above asking price, within mere days of being put on the market. Despite the temptation to profit from your own home’s appreciation, you’ve made the decision to stay put.

Still, you’re concerned – could a negative turn in the real estate market derail your retirement plans? With residential property values at an all-time high and interest rates at an all-time low, is the bubble about to burst, negatively affecting your own financial future? Some
what reassuring is the fact that in one short year, your mortgage will have been paid off.

As a single woman in your late 60’s, you are now focused on finding ways to generate a fixed monthly income to supplement your social security benefit and pension as you phase out your part time employment. Ideally, you can continue to maintain your six figure stock and mutual fund portfolio, reinvesting dividends, and allowing those equity holdings to grow. You might spend some of that money in your later years, but have arranged to have any remaining portfolio assets serve as an inheritance to your grand nieces and nephews.

Converting your home equity into spendable fund through a reverse mortgage can help in two areas of your concern. First, through a HECM line of credit, you can generate a steady, tax-free, lifelong monthly income

At the same time, should your fear of the “bubble” bursting in the real estate market be come true at some point in the future, you would still be able to continue receiving a monthly income for as long as you remain in the home. In fact, should a time come when you can no longer stay in the home, even if the loan balance exceeds the property value at the time, neither you nor your estate would be liable for the deficiency.

Should a more positive scenario play itself out, on the other hand, with your home appreciating to a value that exceeds your mortgage loan, you can choose to refinance, increasing your monthly income.

A reverse mortgage can allow you to lock in home value on a “high note!