Today home equity is where the vast majority of working and near-retirement Americans have the bulk of their net worth. And, for those who were already retired or nearly there, the economic meltdown was a disaster for their portfolios. In many cases they lost half or more of their assets.
Most of them, including many of my friends, placed remaining assets in cash, and therefore missed the market recovery. This means the biggest and best pool of money available to most Americans during their retirement years is their home equity. And, how do you access that without increasing your monthly debt load, and reducing cash flow? A Reverse loan.
Reverse loans can be used to provide monthly income while you stay in your home until you die. Hence the “Aging in Place” motto for reverse lenders. No payments are necessary. Does a reverse loan erode your equity? Sure, but it beats making a monthly payment when you are on a fixed income in your later years. Or, asking your children to help you make ends meet. It pays to check if you are a good candidate for a Reverse Loan. In fact, you'll find that more and more financial planners are embracing Reverse loans as a part of a diversified approach to wealth preservation for their clients.
Reverse Mortgage for a Home Purchase
Yes, you can use a reverse mortgage to buy a home. You are going to put down closer to 50%, but you’ll never have to make another mortgage payment. Not a bad idea, especially if you are selling a home with substantial equity. Why buy all-cash, when you can invest elsewhere to augment income?
Scott Burns with AssetBuilder Inc. has written some very interesting articles about this very topic. You can check out him and his column at www.dallasnews.com or www.assetbuilder.com
Please contact me if I can answer questions or assist you with a reverse loan.