If you have paid off your home and have no mortgage, you have done well and should feel proud of your accomplishment. It took faithfulness and sacrifice to achieve that mile marker. Your home is likely your greatest asset, and yet the money that is in the home, your housing wealth, is tied up with no way to access it unless you sell the home. However, most seniors want to stay in their home forever.
Other seniors are well into retirement and have a monthly mortgage payment that, as the years go on, feels like it is strangling them. If you have a large monthly house payment and would like to eliminate it, then you can also use the wealth in your home to eliminate your monthly mortgage payment.
Many people are in the situation where they are “house-rich, and cash- poor.” They have paid off the house, but are not enjoying retirement due to the constraints of a fixed income. The equity in your home is YOUR money.
Why not access it and put it to work for you? A Home Equity Conversion Mortgage converts some of your equity into a usable asset—either as a lump sum of cash, a growing line of credit, a monthly income stream, or a combination of the three.
At least one borrower must be 62 years old or older, and you need to have around 50% equity in your home, so if you have a mortgage you can still tap into your housing wealth. Income and credit qualifications are adjusted to accommodate senior homeowners, and bruised credit is often no problem.
The amount of equity you can draw is established by the age of the young- est borrower, the value of the property and what is owed. Substantial equity always remains in the home. This is your housing wealth. No one owns the home but you, and you will the property to your heirs who never inherit any debt.
The proceeds of a reverse mortgage are not taxable like other investment accounts, and may be used for any purpose. Many people do a reverse mortgage to plan ahead to be sure that the surviving spouse will always be able to live in the home without a mortgage payment. For others, the line of credit provides a safety net and easy access to funds if-and-when needed. The guaranteed growth of around 5 percent a year, compounding annually means that there will often be a large sum of money for use in the future to pay for home health care or anything else.
The house you paid into for so long can become an asset that pays you back for the rest of your life. Call Kathy Muni your local Reverse mortgage Specialist for the specifics of how this will benefit you. You owe it to yourself and your family to know your options so that you can live your best retirement.
Listen to Muni for Your Money – The Reverse Mortgage Show on Legends 810AM on Saturday mornings at 9 and Sunday mornings at 10:30.
