A Reverse Mortgage Loan Could Help Eliminate Debt in Retirement

Among a series of major decisions anyone should make in the decade leading up to or in actual retirement is what can be done about any outstanding debt that could threaten the stability of fixed income and investment sources. One potential path through the debt navigation process could be a reverse mortgage. Debt and retirement are not typically a desirable combination this is true even of low-interest debt like a [traditional] mortgage.

Generally speaking, not everyone’s tolerance for debt in terms of how it could interact with a senior’s existing assets will be the same. Nevertheless, exploring all of the available option to mitigate its impact on retirement stability is extremely important, and one such tool that can assist in this is a reverse mortgage, the column describes.

Such an instrument may be a form of debt, but it is one that – for the right borrower – can actually enhance retirement stability because of the repayment structure.

There may be situations where debt is acceptable in retirement. For example, a reverse mortgage may be a good decision depending on your situation, particularly if it is used to pay off high interest credit cards, pay off an existing home loan with cumbersome monthly payments; keeping in mind a reverse mortgage loan has no monthly payment requirements therefore boosting household monthly income liquidity.

Beyond potential implementation of a reverse mortgage, there are seven other critical decisions that should be made in the decade preceding retirement, according to the column. These include laying out a general plan for your life; determining exactly what your needs will be based on assets and living situation; refocusing your assets and income on yourself and/or your spouse if supporting children; and avoiding major life changes which can be particularly disruptive in the decade preceding retirement.

Others include taking the time to find ways and strengthen savings; reining in any “adventurousness” in terms of your investment portfolio through an aim to insulate your investments from volatility; and making contingency plans should something unexpected and financially disorienting take place. Utilizing “buffer assets” can be important, which has been used to describe reverse mortgages recently due to pandemic-induced market volatility. I noticed the demand for credit line reverse mortgage loans here in Nevada County: Grass Valley, Nevada City, and Penn Valley, in my own reverse mortgage loan business practice shot up when Covid appeared and the stock market became volatile, therefore providing replacement income to allow retirement investments to recover from said volatility.

Not having a liquid emergency fund is unnerving: a one time-tested rule of thumb is having six months of living expenses in liquid assets (some financial planners now recommend a year or more). And, even though it is uncomfortable, make sure your estate plan covers unanticipated situations like the untimely passing of you or your spouse.” If there is not 6 months of living expenses available, a reverse mortgage credit line loan could be a solid solution.

The more time that is taken to plan in advance, the more someone will be able to enjoy retirement more fully by minimizing unnecessary stressors that may crop up whenever possible, the column says. Including a reverse mortgage credit line loan for regular income infusions, 1 time debt payoff and/or an emergency fund is the list of potential solutions could be illustrative of more general product acceptance as a retirement planning tool. Financial planners continue to recommend reverse mortgage loans as a viable way to handle retirement debt, income stream and/or as an emergency fund solution.

===Grass Valley Local! Shawna McDonald, Reverse Mortgage Loan Officer, 13 year specialization solely in reverse mortgage loans, successfully having completed hundreds of them. Representing 11 of the largest reverse mortgage lenders; get great rates & local, personalized service in person, in Grass Valley, from loan start to finish. Visit my website www.SierraFoothillsReverse.com Available by confirmed appointment in my downtown Grass Valley office or by phone (530) 497-3010 NMLS #271335 | CalDRE #00585530 Zying Mortgage Inc. Company NMLS 76801 |Company CalDRE # 014461===

Article Author: Angelina Kichukova reprint by Chris Clow of Reverse Mortgage Daily