Laurie MacNaughton ©2016
It wasn’t yet noon, but already I had had the same conversation with two separate homeowners:
“It’s not that you have insufficient income; it’s that the first fruits of your income are going right back out the door to pay your home mortgage.”
“It’s like you know me,” the caller said.
Know you? No.
Intimately know your situation? Absolutely. I see it every day.
It boils down to this: retirement + mortgage payment = not a good combo for many older homeowners.
Nationally, most homeowners of retirement age owe nothing on their home by the time they retire. In the greater Washington, D.C. area, however, that is less likely to be true because many homeowners moved to the area as consultants after spending much of their successful career elsewhere. This means many homeowners go into retirement with years yet to go on their mortgage. An alternative – but common – scenario is that homeowners paid cash for their home, and now have much of their net worth tied up in a pricy, illiquid asset.
And the breathtaking irony is this: the same gifts and skill packages that enable homeowners to work into later life can also set them up to falter financially if health fails abruptly and catastrophically, or if any one of life’s many other vagaries ensue.
Back to this morning’s conversation: this homeowner, indeed a consultant, has a home conservatively valued at $1,000,000. He and his wife are in their mid-70’s, but still have 15 years to go on their mortgage. His health is still robust, but his wife was recently diagnosed with cancer. Their fear is they will encounter uncovered medical costs that will consume their investments. It was their financial advisor who suggested they look into a reverse mortgage in order to free themselves of their monthly mortgage payment.
Is a reverse mortgage a fit for everyone? Of course not. No financial product is.
Is a reverse mortgage going to play a part in the long-term financial wellbeing of many retiring – or retired – homeowners? Absolutely.
If you have a family member, client, or colleague who would benefit from knowing more about an FHA-insured reverse mortgage, give me a call.
I always love hearing from you.