A Retirement Tool

Many financial advisors are recommending the reverse mortgage program to homeowners age 62 and older as a successful retirement planning tool. Here are two ways the line of credit option works best as a retirement planning strategy. You can choose to take money as a lump sum or receive monthly disbursements that can be used to pay for living expenses. By doing this, your other investments or benefits will have more time to grow in value before accessing them. You can also start a line of credit without withdrawing any money. With the line of credit, the available money increases in value over time giving you more money available to access in the future. The amount of money available can even exceed the value of your home and is not affected by changing home values. We think every homeowner should consider getting a home equity conversion mortgage line of credit as soon as they turn 62. This great tool gives peace of mind in safeguarding your financial future. The earlier you establish your line of credit, the more time your line of credit will have to grow in value. How does this work? Here’s an example of a couple who got their line of credit at age 62 and didn’t access their available funds until 10 years later:
Mark and Sue are both 62 years old and own a home that is worth $300,000. Their home is paid off so there’s no existing mortgage balance. At their current age, they qualify for approximately $149,700 in their reverse mortgage line of credit with a growth rate of 5.01%. Since they do not need the money right now, the $149,700 amount of funds available remains untouched and grows in value each year by the growth rate. Ten years later, when Mark and Sue are 72 and decide to draw money from their line of credit, the amount of money available to them will be approximately $322,258. This is more than double the amount available at the time the line was started. Over the 10 years where the line was not used, their available funds grew in value by approximately $172,558.*

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