||May 11, 2006
Reverse Mortgages . . .
with Laura Strickler
Laura Strickler -
Your Reverse Mortgage Specialist
Since I have been working in the reverse mortgage field, about 5 years, I have worked with seniors whose needs are as diverse as this country. I really enjoy working with my clients to make sure that the way we structure their reverse mortgage satisfies their specific needs and wants. Sometimes, that requires thinking "outside the box". By that, I mean to look at the whole financial picture and actually "hear" what my client is telling me.
That can mean that a widow wants to have money in a line of credit, accessible whenever she wants or needs money. She may want to help a child purchase a home, pay off debt or fund a grandchild's college tuition. But those gifts may not need to be taken care of immediately. By funding her reverse mortgage into the line of credit, her account will actually "grow" each year. The rate of growth is .50% higher than the current interest rate accrued on any outstanding balance. So, today, the growth rate on the line of credit would be 6.94%. The current interest rate is 6.44%. Now, the interest rate on all reverse mortgages is adjustable. The growth rate on the line of credit will also fluctuate up and down. But, the advantage here is that the line of credit will grow over time, so there will be a larger amount of money to draw out of the line of credit.
Another way to "work the program" is to take part of your available loan proceeds in monthly payments and leave the rest in the line of credit. That way, you will have additional monthly income to enjoy and also have the peace of mind that you have a line of credit available for emergencies. Of course, that emergency may mean a trip to Florida or around the world - but that's up to you!
And some of you may be able to use the reverse mortgage proceeds to pay off an existing mortgage. That in itself is a huge relief! So now, instead of sending the monthly mortgage payment off to the bank, you can leave it in your bank account, or go on a little trip! So many seniors have put mortgages on their own home to help out their children, now there's a way to relieve that burden without burdening the children.
There are many creative ways a financial planner could also help you utilize the funds from a reverse mortgage. Many people are using funds to purchase long term disability insurance. It is quite expensive, but there are also many benefits. Another idea that came from a client; purchase a life insurance policy that will pay off the reverse mortgage when one or the other senior passes on. These are strategies that may benefit your estate. It is definitely worth a phone call to a financial planner/insurance agent to research whether this may be of interest to you. While I do not endorse any financial planner or insurance agent or their strategies, I mention these strategies only because my clients have achieved some peace of mind by putting them in place.
I pass these ideas on to you to get your imagination working. But I do believe that you should speak to an expert on the subject. My goal in passing this information on to you is for you to realize the potential benefit of utilizing a reverse mortgage to help you in your golden years. Please call me if I can answer any questions for you.