We interviewed Marina Watts a loan officer specializing in reverse mortgages on our radio show on NewsTalk AM 940 at 10am Saturday & Sunday. I have never looked at reverse mortgage as a retirement income tool in the past. But now it might be worth considering.
Disclaimer: Toro Bravo Investment Advisors, LLC does not advise or offer reverse mortgages or loans on real estate. This article is informational only. Please seek qualified advice before entering into any home loan.
What is a reverse mortgage? A reverse mortgage is a loan that you take on your fully paid primary residence. You don’t have to make payments on the loan and the loan will be paid back after you and your spouse are deceased or no long live in the home. We asked Marina several questions about reverse mortgages. Here are some of the important points.
⦁ You have to be 62 or older to qualify for a reverse mortgage.
⦁ Credit worthiness is very flexible. A high credit score is not needed.
⦁ You must maintain property tax and home owners insurance.
⦁ The home has to be your primary residence and you can’t be away from the home for more than 12 months.
⦁ If you die or move to a nursing home the home will need to be sold.
⦁ Your heirs, trust, or yourself will sell the home. The bank does not do a forced sell unless more that 12 months has passed from death or lack of residency.
⦁ You can generally borrow 40%-50% of the home value.
⦁ Reverse Mortgage is an FHA loan.
⦁ The fees are $16,000 – $20,000 on a $500,000 value home.
⦁ Interest rate are close to home loans.
⦁ No loan payments are required.
⦁ The loan proceeds are TAX-FREE! (This alone makes up for the high fees)
⦁ The only way to be forced to sell is 1) not pay the taxes or insurance 2) not live in the home for 12 months or 3) not keep up the home maintenance. (Most home insurance require this anyway)
⦁ The loan can be a line of credit, so interest only accrues on amount accessed.
⦁ The equity (after the loan and interest are paid) is yours or will go to your heirs.
Many retired have significant equity (dead money) in their home; a reverse mortgage could free up significant retirement income capital. You can set a reverse mortgage as a line credit years before you actually need it.
Welcome our new Office Assistant: Alexis
As we have gotten busier, we have needed more help at Toro Bravo. In the month of May we hired Alexis Matute to fill the office assistant role. She will support Mandi in the office administration.
Alexis is a WTAMU graduate with a Bachelor of Science in Health Sciences. She was on the Dean’s list in college and had a good work record.
Alexis enjoys hiking and puzzling. That is putting puzzles together. She is the oldest of her family with one brother and sister.
Alexis looks forward to helping our clients with their service requests.
Retire Like You’re on Apollo 13
Brian Keith Moon
After over a year of saying I am writing a book, it is almost ready. “God be willing
and the creek don’t rise,” my retirement planning book will be rolled out in mid-June with the title:
Retire Like You’re on Apollo 13
This book blows the lid off of the ridiculous and conflicted planning advice coming out of Wall Street firms. I have chapters on Social Security that were edited by the National Association of Registered Social Security Analysts, Taxes, Investments and all kinds of Financial Advisors. The final chapter is entitled “Failure is not an Option!” This book is what we do and believe in, at Toro Bravo Investment Advisors, LLC. It will sell on the Amazon site and if you bring the book by the office I will sign it for you. If you like puzzles, like Alexis does, we had 5-10 puzzles with the above graphic made for anyone who calls in and requests one. (While supplies last) In the meantime, we will let you know when the book becomes available on Amazon.
If you are an accumulator and the market loses 10%, you only need a little over 11% to get back to where you were. If you lose 20%, then you need a 25% increase to be back. According to CNBC, a 30% decline over 14 months takes 2 years to recover. If you are adding this up that’s over 3 years.
Sharing Food with our Neighbors
I went to the Philippines for 2 weeks in April. We made a Texas breakfast of scrambled eggs, fresh made biscuits, sausages, and sausage pepper gravy.
We passed out flyers the night before to my wife’s neighbors advertising the ‘free’ Texas breakfast. It was a lot of fun and we gave away 140 eggs and 100 biscuits (That I handmade) to our neighbors where my wife lives. (Matthew 22:39)
Supplemental Disclaimers:
This article is informational only and is not investment advice. This is not an offer to buy, hold, or sell investments like securities or insurance products.
Securities and Investment Advisory Services are offered though Toro Bravo Investment Advisors, LLC. Life Insurance and Annuities sold as an insurance broker are not a fiduciary relationship and are not offered by Toro Bravo Investment Advisors, LLC.
Securities or Insurance are not FDIC/SIPC insured and investments contain risk plus could be subject to loss. Losses could be short term or permanent.
RSSA – Registered Social Security Analyst. RICP – Retirement Income Certified Professional. CF2 – Certified Financial Fiduciary
Economic and market information has been obtained from published sources. While we believe such sources to be reliable, TBIA does not assume responsibility for the accuracy of such information. Numbers and figures illustrated are hypothetical in nature and past performance is not a guarantee or indication of future results/performance.
We are not affiliated with the Social Security Administration (SSA), Internal Revenue Service (IRS), or any Governmental Agency.
Do not rely solely on the Legal, Tax, or Financial information presented for it may not be suitable for your individual situation.
Consult your legal, tax, and/or financial professional before acting on any strategy or recommendation (i.e. major changes or before initiating the purchase, hold, or sale of any investment or investment strategy). Every individual’s strategy can differ depending on current circumstances and goals.