There are many ways that a reverse mortgage can be used as a financial planning tool. A reverse mortgage is a loan that can help seniors fulfill cash needs by allowing them to pull equity on their homes. Today, seniors are finding that they can take advantage of the benefits of a reverse mortgage.
Many seniors rely on their social security and pensions payouts once they become available. However, with the cash that you receive from your reverse mortgage, you will be financially sound enough to wait on those payouts. This will also help increase what you receive.
Postponing drawing down retirement assets, giving assets time to grow.
If you can wait to receive your benefits, the longer they will grow. A reverse mortgage loan allows you to wait for those payouts.
Eliminate monthly mortgage payments and increase your cash flow. With a reverse mortgage, your existing mortgage is paid off. This means extra money in your pocket!
Your credit line will grow. Credit line grows with time. Years from now, your line of credit will be much larger if you apply for a reverse mortgage loan.
Protect your portfolio performance in a down market. Incoming funds are able to protect you when the market is down.
Use your home’s equity and have tax-free monthly withdraws. If you’re the type of person who would rather plan their income as a steady flow, you’re able to choose the option of receiving your funds.
Replace cash reserves. Get up to speed financially by replacing your cash reserves.
Are you looking for a successful retirement plan?
If you’re 62 years of age or older, you should really consider a reverse mortgage and using your line of credit for retirement. This is a great way to plan a successful retirement one day and here is why:
- Take your money as a lump sum or receive monthly disbursements. These can be used to pay off living expenses. Other investments you may have will grow in value before you’re able to access them.
- Start a line of credit without taking any money out, however, you will need to maintain a $50 balance in your account to keep it open. Unused funds increase in value over time which gives you more money. The line of credit gives great peace of mind for safeguarding your financial future.
Here’s an example of a couple who got their line of credit at age 72 and didn’t access their available funds until 10 years later:**
Mark and Sue are 72 years old and own a home that is worth $300,000. Their home is paid off so there’s no existing mortgage balance. At their current age, they qualify for reverse mortgage line of credit for approximately $138,600. Since Mark and Sue do not need money right now, they simply pay their closing costs to open the line of credit and do not take any of the $138,600. Since the line of credit sits untouched with no withdrawals for ten years, the $138,600 increases in value during that time.
When Mark and Sue are 82 and want to draw money from their line of credit, they will have about $221,000 waiting for them. During the 10 years the line was not used, their available funds grew in value by approximately $82,400.