In this video interview, Louis Baca and Chris Handy discuss a possible recession on the horizon and how savvy investors can use lenders to protect and extend the life of their retirement portfolios. They also discuss how setting up a reverse mortgage up on your primary residence can create an “equity savings account.” Extend the life of your retirement portfolio and create financial security with a reverse home mortgage.
Set up a standby credit line and avoid letting the market dictate your retirement lifestyle.
The idea isn’t to take money out of home equity and invest in the stock market. The idea is to give folks a place that they can take their retirement withdrawals from that they are normally taking out of their portfolio, switch it over to home equity and give the market a chance to recover. Once the market starts to recover, they can switch back over the retirement plan.
Access to the original credit line can’t be taken away and the current interest rates will help the credit line grow. If you have a balance in the credit line due to a previous mortgage, then it’s like a savings account where anything you pay into that balance grows. If the interest rates go up, you get a higher return on the reverse mortgage credit line.
A reverse mortgage is also a fallback source of income during a recession since it guarantees you won’t have to pull money out of your retirement portfolio.
- Dr. Barry H. Sacks did a verified study that says that if you take a sequence of returns from multiple years in the market, you will have a better return on your portfolio than if you kept pulling out money when you need to.
A reverse mortgage on your primary residence can create an “equity savings account.”
A reverse mortgage does cost some equity since two percent of your homes value goes into the FHA mortgage insurance pool, but it guarantees that the access and growth to the money won’t get cut off. For example, if you get an FHA home equity conversion mortgage (HECM) in your 60s, the credit line could very well be worth more than your home is by the time you reach your 80s. Additionally, the down payment is determined off of the lower of the sales price or appraisal followed by your age and current interest rates. So right now a 62 year old would put around 50 percent down, and an 80 year old would put around 30 percent down.
What’s more, there is no credit score requirement for a reverse home mortgage. The FHA will check about two years back to see if you have a history of paying taxes and insurance on time. If you haven’t, that doesn’t mean you’ll be denied. You might just have to set aside a portion of your eligibility to pay taxes and insurance out of your credit line.
A lot of people have a strategy where they only use their reverse mortgage for home repairs or to pay taxes once or twice a year.
Convert your home equity to cash with Chris Handy.
If you are at least 62 years old and are interested in using a reverse home mortgage to increase the amount of money available to fund your retirement, contact Chris Handy today. As a multi-state certified reverse mortgage lender, Chris has the experience necessary to help you increase your monthly retirement cash-flow.