Day 3 lesson 3
Downsizing with liquidity while creating asset growth.
Caution; read slowly twice. This actually works! Boomers can buy a new retirement home that better accommodates their needs and can use the extra cash from the sale of their home to establish a line of credit that grows tax free!
Using a reverse mortgage for purchase (HECM standard)
Sales price of old home $400,000
Less 8% selling cost $32,000
Net proceeds $368,000
Price of new home $200,000
HECM loan amount $127,000
Down payment $72,500
Remaining cash $296,000
The buyers would take the $296,000 in cash and pay it into purchase transaction creating a federally guaranteed line of credit that grows over time
Here is what the line of credit would look like 10 years down the road when they pay $296,000 into the HECM for purchase over and above the down payment; the growth percentage will vary depending on the existing interest rates.
This line of credit can never be reduced. These tax free dollars are easily accessible at any time without penalty.
Year 1 $313,925
Year 2 $332,062
Year 3 $351,247
Year 4 $371,541
Year 5 $393,007
Year 6 $415,713
Year 7 $439,731
Year 8 $465,137
Year 9 $492,010
Year10 $520,000
For more information about this amazing produce please contact me.
Comments(0)