Financial planning tools and services to put you on the path to the future you want
Your guide to financial planning and retirement
Connect with peers and experts
Get to know the people behind the company and the mission behind the work
Offer financial wellness to the people at the heart of your business
January 30, 2017
Maybe you don’t have a 401k or IRA or any kind of retirement savings. If this is the case, the experts suggest that you are doomed to barely make ends meet.
However, these so called financial experts are ignoring a VERY big source of your wealth — your home.
You may not have saved enough into a retirement account, but you have worked extremely hard to buy a home and pay down your mortgage. The equity you have amassed in your home can be turned into a secret source of retirement money. In fact, your home is probably your most valuable retirement asset and you have options for how to use that money to help fund retirement:
If you have limited retirement savings, want to stay in your home and need to improve your cashflow, a reverse mortgage is the secret you need to know about. Home equity is half of the average retirees net worth but almost no one takes advantage of it.
A reverse mortgage is a federally-insured loan that allows homeowners age 62 and older to retain home ownership, but also eliminate ongoing mortgage payments and — in many cases — use some of their home equity to help make ends meet. A reverse mortgage is a loan. You are borrowing against your home equity. However, unlike traditional mortgages, with a reverse mortgage you do not have to pay back the money borrowed as long as you are living in the home.
Given the right set of circumstances, a Reverse Mortgage can be an ideal way to increase your spending power and financial security in retirement. What can you get from this kind of loan?
With a reverse mortgage, the loan balance accrues over time. Borrowers are not required to make monthly payments to the loan balance, as you would with a traditional “forward” mortgage. However, you are responsible for paying property taxes and homeowner’s insurance on their property—just as you would with a regular mortgage.
Reverse mortgages can be more than just a secret way to save your retirement.
Reverse mortgages can also be a powerful financial planning tool — a really good back up plan — whether you need access to cash now or not.
Financial flexibility is a big secret to maintaining your wealth. You want to have options. If you need to spend money, you ideally can choose from an array of different sources so that you can use your resources most efficiently.
A reverse mortgage — specifically a reverse mortgage line of credit — gives you this kind of increased financial flexibility.
When you get a reverse mortgage, you have choices for how to take the money. If you take the money in a home equity line of credit, then NO interest accrues on your loan amount and the value of this account actually grows. This reverse mortgage line of credit is a low cost way of increasing your financial options.
You may not need or want extra money now, but when an unexpected financial crisis hits, accessing your home equity last minute with a reverse mortgage is not easily done — this type of loan can take upwards of 45-90 days to fund. Having a reverse mortgage line of credit available may be a good idea for several reasons:
Use a reverse mortgage calculator to find out how much money you can get from a reverse mortgage now. Or, try the suitability quiz to assess whether or not the loan is a good fit for your needs and values.
Getting a reverse mortgage now can be an excellent way to boost financial stability and protect yourself from unpredictability. Best of all, if you qualify for a line of credit, then you can minimize the costs of this loan since you do not pay interest on the money in the line of credit, but it is available for you to withdraw if you need it.
Share this post:
Our weekly newsletter full of inspiration, podcasts, trends and news.
© 2023 NewRetirement, Inc. All rights reserved.
Disclaimer: The content, calculators, and tools on NewRetirement.com are for informational and educational purposes
only and are not investment advice. They apply financial concepts in a general manner and include
hypotheticals based on information you provide. For retirement planning, you should consider other
assets, income, and investments such as equity in a home or savings accounts in addition to your
retirement savings in an IRA or qualified plan such as a 401(k). Among other things, NewRetirement
provides you with a way to estimate your future retirement income needs and assess the impact of
different scenarios on retirement income. NewRetirement Planner and PlannerPlus are tools that
individuals can use on their own behalf to help think through their future plans, but should not be
acted upon as a complete financial plan. We strongly recommend that you seek the advice of a financial
services professional who has a fiduciary relationship with you before making any type of investment or
significant financial decision. NewRetirement strives to keep its information and tools accurate and up
to date. The information presented is based on objective analysis, but it may not be the same that you
find on a particular financial institution, service provider or specific product's site. All content,
tools, financial products, calculations, estimates, forecasts, comparison shopping products and services
are presented without warranty.