Buying a home with The New Reverse Mortgage is better than paying cash
Owning a home without having a mortgage payment has always been the dream of many baby boomers.
It was a strategy that worked for their parent’s generation.
But the world was simpler then and fixed pensions and Social Security provided income they could count on. The world is different now and it calls for different strategies if you’re planning right size your retirement.
Paying cash when buying a home is an “all-in” bet on the economy
And sometimes it’s a winning bet and sometimes it’s a loser.
If the last 30 years have taught us anything, it’s that our economy is subject to violent mood swings (VMS) and the impact on your most valuable asset can be devastating if it should happen during your retirement.
Why The New Reverse Mortgage is the better choice when buying a home.
Frank and Lola wanted to sell their SoCal Home, downsize and move closer to their kids and grand kids. They owned their home free and clear of a mortgage, so they would be able to pay cash for their next home, but Frank wasn’t completely sold on that. He said “then I’d be in the same position I’m in now but in a smaller home and a little bit more money in the bank”.
Leverage your equity to create more retirement cash
Rather than go “all-in” on their next home they decided to leverage their home’s equity. Using The New Reverse Mortgage to purchase their home they would only have to make a down payment of about $200,000 (50% of the price of the new home). That solved two problems, they have no house payment and gave them an additional $300,000 for their rainy day fund and to help their grandchildren pay for college and buy their first home.
Buying a home with The New Reverse Mortgage to “buy up”
Ray and Janet Massey wanted a 3,300-square-foot house with a pool in Katy, Texas, a suburb of Houston, but it was listed at about $533,000. Their previous home, also in the Houston area, was worth only $370,000, with a mortgage that had to be paid off, Mr. Massey says.
The Masseys made a $240,000 down payment, and their reverse mortgage paid for the home. They put down another $250,000 to qualify for a line of credit with a variable rate, currently 5.73%, says Mr. Massey, a 72-year-old retired sales manager at an auto-dealership. He and Janet, who at 71 still works as a packaging-sales executive, have access to money if they need it. But any amount they don’t draw grows annually at the current adjustable-rate—even if home values drop, he adds.
The New Reverse Mortgage isn’t for everyone…but it could be!
If you’re still wondering if a Reverse Mortgage is the right solution for you but you’re not ready to sit down with one of our Reverse Mortgage Experts, then we’ll be happy to mail (or email) you Use Your Home to Stay at Home which is the official federally approved consumer booklet for those considering a reverse mortgage.
Some of this information first appeared in the Wall Street Journal