CAN HOME EQUITY PRESERVE INVESTMENTS?
"HOME EQUITY REPRESENTS ABOUT 66% OF THE AVERAGE RETIRED AMERICAN'S WEALTH", Dr. Wade Pfau
Using home equity to preserve your retirement portfolio can be a viable option for many senior homeowners. Phil Walker is a speaker, author, and 30-year veteran of the financial services industry. He is the Vice President of Strategic Partnerships, Retirement Strategies Division at Finance of America Reverse LLC, one of the top reverse mortgage lenders today. His experience as a retirement strategist includes stops at MetLife, Morgan Stanley, Smith Barney, and Merrill Lynch, a featured contribution to Financial Advisor Magazine (“The Boomer Effect”), and frequent speaking engagements with the Financial Planning Association. Phil Walker has some insightful information about including home equity as an asset alongside a client's retirement portfolio.
- "Financial planners have long regarded diversification and asset allocation as essential tools for reducing portfolio risk for their clients. This is especially true for retired clients who regularly draw on their portfolios for income.
- Another essential tool for risk reduction, but one not adequately recognized by financial planners, is the inclusion of home equity in the retirement portfolio as an asset along with, and similar to, investment securities. An essential aspect of the inclusion of home equity in the portfolio is a withdrawal strategy that, in a disciplined way, uses that asset.
- The inclusion of home equity as an asset in the portfolio is notional; the equity serves as a source of retirement income just like the other assets in the portfolio, according to the algorithm described herein; but there is no transfer of ownership, control, or management of the home. An essential aspect of the inclusion of home equity in the portfolio is a withdrawal strategy that, in a disciplined way, uses that asset."
- https://www.financialplanningassociation.org/article/reduce-risk-retirement-portfolio-exhaustion-include-home-equity-non-correlated-asset-OPEN
Home equity is another asset source apart from investment funds that can provide reinforcement to your client's investment portfolio. Utilizing home equity can help clients retain their investment assets, improve retirement planning, and improve outcomes. We do this with the reverse mortgage proposal which outlines cash out, line of credit (where applicable), and closing costs.
THE REVERSE MORTGAGE JUMBO, A PROPRETIARY PRODUCT FOR HIGHER-VALUE HOMES
Jumbo reverse mortgages are available on homes valued up to $10 million and maximum loan amounts up to $4 million. FHA's HECM, Home Equity Conversion Mortgage, has a maximum loan amount of $1,089,300 so for those homes valued much higher, it makes sense to take a look at the jumbo/proprietary reverse mortgage. Rates are higher than the HECM, but closing costs are lower as there is no mortgage insurance on these loans. Higher-value homes will be better served with the proprietary jumbo reverse mortgage as cash out numbers can often be higher. There is also a proprietary product with a growing line of credit.
Give us a call, and we'll provide a free reverse mortgage proposal comparing the FHA HECM with the proprietary jumbo reverse mortgage.
Questions? 631-804-9044 or 888-843-9797 (24 HRS)
Strategies for Enhancing Retirement
what clients need
access TAX-FREE FUNDS
access TAX-FREE FUNDS
- Home equity is one of the most valuable assets a homeowner can have.
- Do you have clients who are waiting to claim social security but could use more income?
- Are your clients looking for ways to generate more retirement income without touching their investment portfolios?
- Would they like to use tax-free money for in-home care?
access TAX-FREE FUNDS
access TAX-FREE FUNDS
access TAX-FREE FUNDS
- Access tax-free funds from home equity rather than taxable assets or 401k's and generate retirement income.
- When retirement sustainability is in question, consider accessing home equity with a reverse mortgage.
- Set up a credit line that grows year after year and can never be frozen by the lender.
- FHA reverse lines of credit (also tax free) grow at the interest rate on the loan PLUS another one half percent!
USES FOR HOME EQUITY
access TAX-FREE FUNDS
USES FOR HOME EQUITY
- Pay off mortgages and high-interest credit card debt to increase cash flow or use proceeds to pay for in-home care.
- Make needed repairs or renovations on your home to accommodate your needs for a more comfortable environment.
- Lower taxable income by replacing investment draws with reverse mortgage proceeds. The IRS does not consider these proceeds as taxable income.
- Purchase a home with a reverse mortgage and move closer to family.
Requirements for Reverse Mortgages
REQUIREMENTS FOR OBTAINING A REVERSE MORTGAGE
* Must be at least 62 years of age (some proprietary products begin at 55)
* Must reside in the home as your primary residence at least 6 months of the year
* Acceptable property types: 1-4 single family homes, condos, co-ops in New York state, and approved manufactured homes, multi-family homes. You must reside in one of the multi-family units as your primary residence.
* Condos: Condos must be FHA approved for single-unit approval. Proprietary jumbos must also be approved for single-unit approval. The entire condominium complex does not need approval.
* Must continue to pay taxes, insurance, and all fees associated with your residence such as HOA fees, common charges where applicable. and maintenance fees for co-ops, etc.
* Receive mortgage counseling is required on all reverse mortgages with a HUD-approved counselor whether FHA HECM or Jumbo Proprietary reverse mortgages.
BENEFITS OF HAVING A REVERSE MORTGAGE
- INCREASE CASH FLOW & SET UP A GROWING LINE OF CREDIT FOR FUTURE DRAWS
- NO MONTHLY MORTGAGE PAYMENTS UNLESS CLIENTS CHOOSE TO DO SO
- PROCEERDS NOT CONSIDERED TAXABLE INCOME BY THE IRS
- BORROWERS REMAIN ON TITLE AND CONTINUE TO OWN THEIR HOME
- WILL NOT AFFECT SOCIAL SECURITY, MEDICARE, RETIREMENT INCOME or PORTFOLIO
- REPLACES THE NEED TO TAP INTO INVESTMENTS BY USING HOME EQUITY INSTEAD
- PROTECT UNDERAGE SPOUSES WHO RESIDE IN THE HOME AS THEIR PRIMARY
- USE HOME EQUITY INSTEAD OF DRAWING FROM RETIRMENT FUNDS
CONTACT KATHIE ADLER 631-804-9044 or 888-843-9797
