Downsizing—-A Reverse Mortgage could save you thousands of dollars
My father once said to me: “The older you are when you have children, the older you are when they come back.” I didn’t always heed a lot of his advice but in this instance I’m glad I did.
Like most baby boomers our age the last of the kids are out on their own and many of us are considering downsizing.
● A smaller home in Orange County will allow us to simplify our lifestyle
● Live closer to our children and grandchildren
● Enjoy the lifestyle of a 55 and older community
● Provide additional income needed to meet your retirement goals.
Regardless of your retirement plan, a Reverse Mortgage may be the solution for you.
Why a Reverse Mortgage?
As a long time homeowner in Orange County you’re used to budgeting for a mortgage payment each month, along with property taxes and homeowner’s insurance. But getting a mortgage in today’s world has gotten a lot harder and the stricter lending requirements can be a daunting task if retirement is already here or right around the corner.
The law requires lenders of “forward” mortgages to scrutinize all your income and asset documentation to determine your “ability to repay” and that can be tough when you’re on a fixed income.
A reverse mortgage is exempt from these requirements. We do want to make sure you have enough income to continue to pay your taxes and insurance, but there are no debt to income requirements with a reverse mortgage.
Should I pay cash or get a Reverse Mortgage?
For many of us, in Orange County owning our homes outright with no mortgage has been priority number one in our retirement planning, so paying cash is the obvious answer. But is it really the best use of the proceeds from the sale of your home?
We all remember the housing bubble of 2007 when home values declined by up to 50% in many parts of California. If you owned your home free &clear, that would have been 50% of your money gone. With a reverse mortgage, you would have protected at least 50% of your equity and still been without a house payment.
Regardless of what happens in the future to home values by paying cash you are taking a liquid asset (cash proceeds) and investing it in a non-liquid asset (your new home) and in the event you want/need to access that cash you’ll have to create a debt that requires a monthly payment.
With a reverse mortgage, you will be able to put that money to work in whatever way you see fit.
If downsizing is in your future, come in and let’s see if a Reverse Mortgage is the right answer for you.
For more information from Reverse Lending Experts, contact us at (657)-888-3863.