For many seniors in or entering retirement, the prospect of purchasing long-term care, investments or annuities can be cut short by a lack of retirement income. Statistics show that 3 out 4 seniors will have to lower their current standard of living during retirement. Social Security, IRA's, 401k's, and other methods of retirement income usually provide enough income for living expenses and recreational activities, but do not leave much room to improve your financial future. A Reverse Mortgage is an increasingly popular solution for increasing income, and large amount of tax-free funds to safely move into investments and securities.
Reverse Mortgages are Federally regulated and guaranteed financial vehicles that allow a senior, age 62 or above, to extract a large amount of the equity locked in most senior's largest illiquid asset: the home. A Reverse Mortgage will provide a percentage of the home's appraised value, usually 20-60%, in a variety of different payout methods, but the senior is never required to make a payment on the loan for as long as they live in the home. All repayment, closing cost, and interest are repaid when the senior moves or the home is sold, so it produces a large amount of capital with absolutely no risk of default or foreclosure on the home. "There a is Reverse Mortgage myth that the bank can take your home, that is totally false" says Troy Shellhammer of Reverse Mortgage Nation.
All funds generated with a Reverse Mortgage are tax-free. They also will NOT impact any social security or Medicare benefits. This vehicle becomes very attractive when looking at ways to increase income or an investment portfolio. Example: A couple who are both age 65, with a home value of $200,000, zero mortgage, and are looking to either purchase an immediate annuity or a joint long-term care insurance policy. A Reverse Mortgage could potentially provide over $100,000 to fund the annuity or a single premium insurance policy, with interest growth and a long-term care rider.
The true power of the Reverse Mortgage as an investment tool lies in two aspect of the product. The first is that any funds generated from a Reverse Mortgage are completely tax free, and will not affect the tax bracket of the applicant. The other is the single largest asset of most seniors is their home. The home is a peculiar investment because the only way to see a real return from the growth of the home's value through its preciation is to sell the home, or liquidate the entire asset.
A Reverse Mortgage lets the savvy senior employ the appreciation of the home without having to leave the home, or make any payments on the loan. These are some of the reasons that in last three years, the average of Reverse Mortgage loans produced nationwide has risen almost 300%, along with a rise in loans done on homes with values of $500,000 and up rising almost 500%.
About the Author
Troy Shellhammer is a Reverse Mortgage specialist with Next Generation Financial Services, a division of 1st Mariner Bank. He advises seniors on the Reverse Mortgage process and produces Reverse Mortgage loans nationwide. Please visit his website at http://www.reversemortgagenation.com/troyshellhammer or call 1-888-9 REVERSE for any questions, information, or an estimate on what you or your friends and relatives may receive with a Reverse Mortgage. |
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