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An Innovative Way to Pay Off Your Mortgage (And Plan for Retirement)

By
Mortgage and Lending with PS Mortgage Lending 305-791-4874 or 888-845-6630 365768

An Innovative Way to Pay Off Your Mortgage (and Plan For Retirement)

When I speak to clients for the first time, they often tell me one of the reasons they never considered a reverse mortgage is because they do not currently have a mortgage.

I let them know, off the bat, that while the reverse mortgage was created as a way to help seniors pay off their mortgage, that facet of the program is only the tip of the iceberg. The reverse mortgage, while not well known for its flexibility, is one of the most flexible mortgage programs around. 

If a borrower has a need or simply wants to pay off their mortgage, then they can, and any left-over funds can be stored in a line of credit or can be received via monthly payments for a set amount of years or for life (as long as the borrower lives in their primary residence).

However, the reverse mortgage can also be used as an innovative long-term retirement planning tool. This is the part where many borrowers and their heirs find themselves at a loss because many continue too look into the reverse mortgage (MAINLY) as a loan of last resort when it is, in fact, an innovative way to plan for your retirement and/or pay off your mortgage.

In some cases, the reverse mortgage can be used for both.

For example, a borrower who is 62 with a spouse that is 65 can receive approximately 50% of their home value (this amount is partially determined by age). If their appraised home value is approximately 300k, then they can potentially receive 145k, after approximately 5k in closing costs (this is only an approximation.) 

If they owe 100k on their mortgage then that will be paid off first, leaving a 45k difference. Under the new reverse mortgage program, borrowers can store the difference in a line of credit that grows yearly on the unused portion. In this scenario, borrowers pay off their mortgage, save their monthly mortgage payment and have a line of credit growing for them as a Plan Z.

While every scenario is different and there are multiple factors worth considering, a reverse mortgage can offer borrowers a flexible way to plan their long-term retirement. 

If a borrower owes nothing on their mortgage, then the proceeds of the reverse mortgage can go directly into the line of credit and utilize the program as a Plan Z. If a borrower passes away without using the line of credit, then the only cost that is repaid is closing costs.

However, no one knows the future and having extra plans in place besides the more traditional retirement plans is a sure fire to make sure you outlive your money and not the other way around.

In some instances, simply paying off the mortgage is enough to make retirement that much less stressful. It is all up to our client's goals, needs and financial stability. A reverse mortgage may be just the innovative solution you have been searching for to pay off your mortgage (and plan for retirement).

Interested in a reverse mortgage or simply want more information? Give PS Financial Services a call at (888) 845-6630 or via email at info@PSReverseMortgage.com.

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Information and content in this blog is original to Phil Stevenson

Please click the "SUBSCRIBE TO MY BLOG" button on the right, and receive more Traditional and Reverse Mortgage information in Florida and other parts of the US & Puerto Rico.

 

Phil Stevenson

PS Financial Services

Owner and Principal Mortgage Originator

Certified Reverse Mortgage Professional (CRMP)

LO #365768

NMLS #968090

Cell: 888.845.6630

Miami Mortgages & Florida Mortgages

Copyright © 2013 by Phil Stevenson & PS Financial Services, LLC

Comments (3)

Raoul Loustaunau
EXP REALTY - Phoenix, AZ
urhomefinder.com myvaluetoday.com

looks like very nice information ,but i dont understand it very well ;hope you have a great day Phil Stevenson

Feb 16, 2015 09:22 PM
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Phil, You didn't mention the one I like: Using a reverse mortgage to buy a new house. They can sell their existing house, bank most of the money tax free (up tp $500,000.00), and make an approximate 50% down payment on a new house with the balance paid by the reverse mortgage.

Bill Roberts

Feb 16, 2015 10:27 PM
Phil Stevenson, CRMP
PS Mortgage Lending 305-791-4874 or 888-845-6630 - Miami, FL
"Mortgage Nerd" in Miami, Florida and Texas

Raoul, it may look tough at first glance but it's not that much. The more you know, the more you can offer your clients.

Bill, glad to hear you like that one! I focused on more traditional uses for the reverse mortgage but that one is always on the table if the situation suits it.

Feb 18, 2015 06:27 AM