During Your working years, most of your effort is in supporting your Home. When we retire, it can become a fitting financial tool to help support you!
Home Equity is our most valuable asset. It may also be our most versatile Asset.
As an option, use the equity to delay taking Social Security at age 62, by doing so, the withdrawal would occur at age 70 1/2 and it would have the added benefit of an 8% per year growth to your benefit. This advantage becomes very substantial when you finally exercise the Social Security withdrawal.
For those unforeseen events, a reverse equity line of credit that is accessible and will not require monthly payments, while correcting the financial course you have planned during your non-working years.
As an option, if you’re married, use a 2nd to die life insurance policy to replace any equity used during your lifetime – thus, full value can be transferred to Heirs and it was provided by part of the equity nested in your home – the other part can be used to supplement your income requirements at no loss to your Heirs.
What is a Reverse Mortgage?
A reverse mortgage is a loan available to seniors over the age of 62 which allows them to convert equity in their home into cash. These loans were created to give seniors access to cash for expenses such as home improvements, unexpected medical costs, and in-home care by utilizing the accumulated equity in their homes.
This type of loan is called a reverse mortgage because instead of the borrower making monthly payments to their lender as they would with a traditional mortgage, the lender makes payments to the borrower. Unlike a traditional home equity loan or second mortgage, a reverse mortgage does not have to be repaid until the borrower no longer occupies the home as their primary residence.
The most common reverse mortgage is the Home Equity Conversion Mortgage (HECM) which is insured by the FHA. An alternative option is the Proprietary Reverse Mortgage which is not backed by the federal government.