Welcome to It's Just Stuff's #whatsonyourmindwednesday guest blogs. Every week #TeamIJS is inviting one of our Preferred Partners to share what is on their minds as it relates to the services they provide and the connection to helping anyone struggling with organizing and executive functioning skills.
This week we invited Gabe Bodner of Fairway Mortgage to share his view on retirement and the latest information about home equity conversion mortgages as part of our "Moving On" theme for June. As someone who was married to an independent mortgage broker for several years, I learned more than I ever imagined about the mortgage industry. And while the idea of a "reverse mortgage" was something that less than reputable lenders were pushing on uninformed homeowners, the standards have changed and professionals like Gabe are trying to make sure that no one is taken advantage of, especially as they are reaching retirement and want to use the equity in their homes to supplement their retirement income. I think the question he posed, "What does your retirement picture look like?" is one that we must all be asking ourselves constantly and reevaluate whether this type of mortgage makes sense for each individual's circumstances.
As a professional organizer and move management specialist, I see far too many people struggling with the decision about whether to remain in their current home or downsize. So if you or someone you know is facing this decision and needs advice, I highly recommend reaching out to Gabe.
That's what's on my mind today,
COCTC aka Chief of Chaos to Calm
What does your retirement picture look like?
Picture your grandparents' retirement.
Now picture your parents' retirement.
What did the world look like back then?
How much did a gallon of gas cost?
How much did a dozen eggs cost?
How much did a bottle of soda cost?
How much did homes cost?
What were interest rates?
Now visualize your retirement.
Does it look the same?
If you are like me, the answer would be that everything has changed!
My future retirement will not look anything close to my parents' or grandparents' retirement! Part of the difference is not just the cost of living and home prices but society is totally different today than what it was 40, 50, 60 years ago.
When we think about how retirement has changed and how it looks, I would argue that the tools used for retirement are also different. My mother was a teacher for 30+ years and receives a pension. My grandparents lived a very modest, mediocre retirement (at best) on social security and never traveled or took any vacations at all.
So when I visualize my retirement, there is no pension plan in sight and I do not want to sit in a rocking chair for 30 years and grow old and not travel or take any vacations. I want to live a long, fulfilling, fun retirement and I need money to do all of those items on my bucket list. That's when I have to ask myself, what tools do I need to achieve the retirement that I have always dreamed of?
Well, I can tell you that reducing my monthly expenses is certainly one of the most critical pieces to that equation. Let's face it if my income is less in retirement then ultimately my expenses need to also be reduced. So I will need to get rid of my mortgage payment which is typically the largest monthly expense.
On top of reducing expenses, I need cash to pay for all of the activities and trips that I want to take. The money I have saved in my 401K and my IRA is simply not enough to cover a 30-year retirement. Ultimately, that money is designed to help replace lost income in retirement. Therefore, I need to tap into my home equity to access some additional cash to cover larger expenses in retirement. I paid into my home during all of my working years and now it is time to pull some of that money (equity) back out.
How do I access my home equity and still not have a mortgage payment?
I can't do that with a 30-year or 15-year mortgage or a HELOC (Home Equity Line of Credit). Even if the rate is 2 or 3 or 4%, I still need to pay it back right?
A home equity conversion mortgage.
This is a tool that allows you to access your home's equity and not have to make monthly payments. You can make payments but you are simply not required to make payments. This is ultimately the most incredible retirement planning tool that exists today. Seriously...you can access your home's equity without ever needing to pay it back until you sell the house. Yes, you still need to pay your property taxes, home insurance, and HOA dues if applicable.
But if you never sell your home, you never have to pay the loan back. Your heirs simply pay it back using the proceeds of the sale of the home someday after you are gone. Oh and guess what else? You do not need to pay any income taxes on the equity that you take out, but please do consult with a tax account or financial advisor to make sure this really is the right product for your situation.
So what's the catch?
There isn't any...seriously!
OK, there is one...you must be at least 62 years old to qualify. Yes, that's right for all of you who are in your 30's, 40's and 50's, you have to wait a few more years to get your home equity conversion mortgage but start thinking about it sooner rather than later. I, for one, will get mine as soon as I am eligible because I really do believe this is the most powerful retirement tool that exists today and it is a flexible and financially smart strategy that can increase your cash flow, overall quality of life in retirement and improve your financial probability of success in retirement as well.
Please feel free to contact me to learn more about this amazing mortgage product and if you qualify for a home equity conversion mortgage today.
Fairway Independent Mortgage Corp.