Friday, March 7, 2014 - Article by: rmcinturff - Proficio Mortgage -
Are you aware that if you are over 62 and have enough equity in your home to qualify for a reverse mortgage and choose the Line of Credit function to draw your cash from your home that some folks can qualify for a guaranteed growth rate of 6.310% on their available funds? Can you beat that with any other financial vehicle? Annuity, stocks, bonds, CDs, or other investments?
There are folks that have the right circumstances to qualify for something like this. Here goes. Its called the HECM Choice and it requires that a reverse mortgage candidate have at least 40% of their available principal limit somehow tied to hard and soft debt requirements- hard being liens on the home and soft being commitments to other debt or bills not necessarily related to the home (credit cards, medical bills, home improvements, property taxes, etc). The principal limit is calculated using the home's value, the youngest borrowers age and a 5% Expected rate. IF a borrower fits into this scenario they will be required to take that 40% at closing along with another 20% as a lump sum at closing, which leaves the other 40% of principal limit to grow at 6.310% for as long as they live in the home.
I've run scenarios for folks that started with just over $120,000 in that line of credit that they don't want to touch until their investment accounts begin to show signs of wearing thin although with growth of 6.310% it may be worth using some of the annual growth as monthly cashflow instead of taking as much from their investment account/retirement account. A line of credit of $120,000 would be worth $167,000 in 5 years and $228,000 in 10 years. The homeowner could take those funds in any increment, at any time and not incur taxes on any money they draw from their line of credit. Any money drawn and accruing interest would have to be paid back at the end of the life of the loan which would be when the last remaining homeowner dies, sells or moves away BUT what an amazing amount of guaranteed growth without having to sell or invest in anything- its in the home you already live in.
More financial planners are suggesting reverse mortgages to their clients as talked about in this recent article- http://www.financialadvisoriq.com/c/839814/74934/look_recommending_reverse_mortgages?referrer_module=issueHeadline&module_order=0
How can we help you solve part of an increasingly complex retirement puzzle?
Rick McInturff, Proficio Mortgage reverse mortgage consultant
240-506-4611 and email@example.com
A equal housing opportunity provider.
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