A New Solution to the Senior Care Challenge

“When we give cheerfully and accept gratefully, everyone is blessed .”- Maya Angelou

THE REVERSE MORTGAGE STANDBY LINE OF CREDIT  

When it comes to using a reverse mortgage in retirement planning, there are several strategies that make the standby line of credit feature a “must have” for seniors. In particular, the Reverse Mortgage Standby Line of Credit can be a great solution to help create a senior care funding strategy.

Here are some key considerations for a senior care funding strategy and the standby line of credit:

  • In-home care services can reduce the need for expensive nursing homes and improve quality of care.
  • Services can gradually be ramped up as needed—from help with household chores, to 24-hour nursing care.
  • A Reverse Mortgage Standby Line of Credit can be set up in advance—before care is needed—so funding is at-the-ready.
  • Unlike a traditional Home Equity Line of Credit (HELOC), the unused portion of the reverse mortgage line of credit grows over time, allowing access to more funds as the borrower ages. And the line cannot be reduced or revoked by the lender, as long as the terms of the loan are met — ensuring the funds will be there when needed.
  • There are no monthly mortgage payments for as long as you live in your home. Homeowners do remain responsible for keeping current with property taxes, required insurance and home maintenance.
  • Proceeds are tax-free (this is not tax advice so please consult a tax professional)
A Reverse Mortgage Standby Line of Credit is a smart retirement funding tool that leverages the power of an important asset – your home equity – to help make sure you’ll be in the position to receive the care you need and continue to live in your own home.
THE NUMBERS 
  • Over 97% of Americans make no advance financial plans for senior care needs. Yet 70% will need some form of senior care in their lifetime.
  • Most incorrectly believe their medical insurance will pay for care.
  • Annual costs start at approximately $30,000 for in-home care and range up to $94,000 for nursing home care.

Using Your Home Equity as a Retirement Asset

“The best preparation for tomorrow is doing your best today.” – H. Jackson Brown Jr.

REVERSE MORTGAGE BASICS 

Why You Should Consider a Reverse Mortgage  

It’s been a while since I’ve talked about the basics of a reverse mortgage and how this versatile retirement financial tool can help provide peace of mind in your golden years.

Reverse mortgages are becoming increasingly recognized by homeowners and financial advisors as a smart and safe way to access an important retirement asset: your home equity.

Most reverse mortgages are government-insured Home Equity Conversion Mortgages (HECMs). You will often hear the terms used interchangeably. Available exclusively to people age 62 and older, a reverse mortgage could help you live more comfortably and be more financially prepared for the future.

For example, you can use a reverse mortgage to >>

  • Avoid selling investments at a loss in a “down” market.
  • Establish a “stand-by” line of credit that you can tap into as needed. Unlike a traditional Home Equity Line of Credit (HELOC), a reverse mortgage line of credit cannot be reduced or revoked, as long as the terms of the loan are met. And the unused line of credit grows over time.
  • Supplement retirement income with tax-free funds.
  • Pay for medical or long-term care costs.
  • Finance the purchase of a more suitable home, with no monthly mortgage payments. 

To be eligible for a reverse mortgage, you must:

  • Be at least 62 years old
  • Live in the home as your primary residence
  • Not be delinquent on any federal debt
  • Participate in a consumer information session held be an independent counselor who’s approved by the U.S. Department of Housing and Urban Development (HUD)

Some of the Key Benefits of a Reverse Mortgage 

  • The ability to use your home equity to help you maintain a more comfortable standard of living, in your own home.
  • Tax-free loan proceeds you can use in multiple ways.
  • Great flexibility. You can choose to take your proceeds as a line of credit; monthly advances for a set period of time; a monthly stream of funds for as long as you live in your home; a lump sum; or a combination of these options.
  • No monthly mortgage payments. If you qualify and have an existing mortgage, home equity loan or any other type of debt, you can pay it off and reduce your monthly expenses. Or, if you own your home free-and-clear, you can get the additional funds you need with no monthly mortgage payments.

One thing to note is that as the homeowner, you remain responsible for paying property taxes, homeowner’s insurance and homeowner’s association dues if applicable.

HOW MUCH MONEY CAN YOU GET? 

This depends upon a number of factors including your age, your home’s current appraised market value, the amount of equity, FHA lending limits, the current interest rate, and the reverse mortgage product and payment option you choose. If you have an existing mortgage, your reverse mortgage will first be used to pay that off.

Would you like to learn more about reverse mortgages and get a quote that’s tailored to your specific needs and situation? Contact me to have a conversation or to set up a complimentary personal assessment.