Helping Seniors Make Informed Financial Choices

A reverse mortgage is the missing link in financial planning.  It is   often overlooked that a huge     number of seniors 62 years of age and older have billions of dollars locked up in their homes—not in safes and lockboxes—but hidden in the bricks.  Many seniors have seen the house they purchased years ago grow in value by huge percentages in the last 15 to 20 years.  They are, of course, proud and pleased that the home they purchased for $45,000 is now valued at $300,000 on the resale market.  But all of this equity produces zero when it comes to investments or the protection products they need, such as life   insurance and long-term care      insurance.

These high value homes represent a large portion of the net worth of a great number of seniors, but the question remains: How can they use some of that equity to pay for things they need or want now, such as funding long-term care insurance, giving to their grandchildren, or enhancing their lifestyle?  There are many questions associated with these choices.  They could always sell their current home and move to a smaller house, but where will they find one and how much will they retain of the sale proceeds?  And, what if they do not want to move away from their friends and family?

Another option is to refinance the home and use some of the money to fulfill their financial needs.  If this can be done, it creates a monthly payment that must be sent to the mortgage company, and seniors don’t want or need more payments.  Credit ratings may add additional costs to this option.

If neither moving nor refinancing are what the senior wants, the    solution may be a reverse mortgage, a non-recourse mortgage against the equity in a home.  The senior may use the tax-free proceeds from this reverse mortgage as they see fit— pay for the education of their  grandchildren, or allow their       investments to continue growing by replacing the portfolio income with tax-free dollars from the reverse mortgage.  Your clients stays       invested, reduces taxes, and has the equity in their home working for them.  And, they have no payment to make as long as they live in the house.

Many seniors are interested in    donating and performing kind acts for charities, their church or     synagogue, college or university.  Unfortunately, most of the giving comes after the death of the client from the proceeds of the estate.  Now they can take a large amount of money out of the home by using a reverse mortgage, give the funds to the charity, receive a tax deduction, and use part of the tax savings to purchase a life insurance policy to replace the borrowed equity in the home at death.  The charity receives funding and the senior has the    opportunity to see the good the money is doing.

 

Most seniors want to stay in their home as long as they physically can.  However, in time, they may need some assistance to do so.  This    assistance can be costly in terms of money or effort put forth by family members.  A long-term care policy can supply the funds to help keep people out of a nursing facility and in the more pleasant atmosphere of home.  Many people are forced to borrow against the house or sell it to pay the expenses incurred during a long-term care confinement.  But by having a long-term care policy in force, the senior has more dollars available and is not required to   negotiate a new mortgage while ill.  They may even choose a policy that will return all premiums paid to a named beneficiary, tax-free at death.  Yes, all the premiums paid are returned to a named            beneficiary.

Call us today to see how a reverse mortgage could be the missing link to your financial planning.  You can reach us at (775) 823-8400.