CONTENT SPONSORED BY Silver Leaf Mortgage
Are you wondering if you have the resources to fund your retirement? Millions of Americans are asking themselves the same question. Those who are still working are trying to plan strategically and are wondering how much they need to have in their retirement accounts to live comfortably. Those who have already retired wonder if their funds will last as many Americans enjoy their Golden Years for longer and longer. Quality of life is important. Still, others who are further into retirement can see ahead to the year their retirement funds will be depleted. Some are on a fixed social security income and are stretched to the max each month.
According to the United States Government Accountability Office report of May 2015, among households ages, 55 to 64, more than 55% have less than $25,000 in retirement accounts, and roughly 41% have no retirement savings. Many of these households rely on a pension plan or social security and are otherwise “house rich and cash poor.” Most are concerned that they cannot live on their current retirement budget. These worries are compounded by the high rate of housing cost burdens among older adults and high out-of-pocket health care costs.
Having a HECM reverse mortgage loan can help retirees to better manage these issues in retirement. The government-insured Home Equity Conversion Mortgage (HECM) came into being under President Ronald Reagan and has seen excellent changes over the years which make it a safe product that protects the homeowner. Today, many concerns about reverse mortgages are driven by misconceptions and half-truths about how the program works. In recent years, concerns about borrowers’ risks have been addressed by new guidelines from the Federal Housing Administration, which insures these loans. Third-party counseling is a requirement to be sure that you understand how the program works.
There are various types of reverse mortgages, but generally speaking homeowners ages 62 and older can use reverse mortgages to access equity as a line of credit, a pre-determined monthly payment, or a lump sum cash out. The loan must be repaid after the home is sold or when the last borrower or eligible spouse dies or has permanently moved out of the home.
As noted by the team at Silver Leaf Mortgage, one of Colorado’s top reverse mortgage advocates, a reverse mortgage is far from being the “loan of last resort.” Structured correctly, it is being utilized by savvy seniors to accomplish their goals in retirement. This often includes things such as 1) delaying social security and pension payouts; 2) allowing retirement accounts time to grow before using them; 3) increasing cash flow by eliminating a mortgage payments and other debt; 4) making necessary home repairs; 5) providing for long-term health care needs; 6) replacing cash reserves; and/or 7) augmenting other retirement resources.
The benefits of a reverse mortgage are numerous:
Access home equity. You are able to access your home equity, likely a substantial portion of your wealth, without having to leave your home.
Remain in your home. As long as you keep your loan in good standing and stay current on taxes and insurance, you may remain in the home for as long as you live.
Defer payments. You can defer payments on a reverse mortgage until you leave the home or pass away.
Flexibility. The Home Equity Conversion Mortgage (HECM) program is extremely flexible in terms of withdrawing the proceeds of your loan.
Line of credit. HECM’s credit line option can be incredibly attractive, as an unused credit line will grow over time.
Pay off debt. It can be useful for paying off a mortgage or expensive consumer debt.
Limit on what you owe. Neither you nor your heirs will ever owe more than the home is worth.
Extend your retirement savings. Money from a reverse mortgage can be used to delay collecting social security, which could allow you to receive your full retirement benefit. It may also allow you to delay pulling money out of retirement accounts.
Use for Deferred Maintenance. Borrowers are free to use loan proceeds as needed for things such as repairs and/or renovations to their homes.
Use money as you like. The tax-free funds from a reverse mortgage can also be spent in any way you’d like. You can pay for deferred home maintenance or upgrade for long-term health needs, travel or pay for your grandchildren’s college education, or just put it aside for a rainy day.
Federally insured. The HECM reverse mortgage is federally insured. If your lender defaults, you’ll still receive your payments.
For qualified homeowners, with or without a current mortgage, these are just some of the many reasons a HECM reverse mortgage should be considered as an important element in securing your financial well-being in retirement.
Each individual’s circumstances are unique. The type of reverse mortgage, size and availability of the line of credit all depend on various factors. Most banks and lenders will tell you they can do a reverse mortgage. To be certain you are getting the best loan for your unique situation, it is really important to work with a qualified reverse mortgage broker or specialist. Talk to an advisor to review your retirement plan today and see how a HECM reverse mortgage loan fits into your secure financial plan for living your best retirement!
Silver Leaf Mortgage is based in Centennial, CO. They are Colorado’s number 1 reverse mortgage broker and a proud sponsor of Senior Source.
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