Since the start of this recession period, home values have continued to decline. Even though it is said that the recession ended in 2009, the values of properties have not increased. Many home owners who borrowed against their home equity are now finding themselves owing more than their homes are actually worth. Home owners with 2nd mortgages are more likely to be the ones who are considered “under water” rather than home owners with just one mortgage. Yes, many times home values recover after a recession period, but it is not a wise idea to count on your home value when doing your retirement planning.
What about using a Reverse Mortgage?
Age 62 or older, you can take a reverse mortgage to borrow against the value of your home. You’re not required to pay back the principle during your lifetime for as long as you continue to live in the home. This retirement planning strategy might be appropriate for some retirees but there are substantial fees involved. Usually, the settlement fees are higher than a regular mortgage and the amount that you can borrow is a lot less than the value of the home. The reverse mortgage must be paid back 1 year after you stop living in the home. So, it’s likely that you or your heirs will have to sell the home and therefore be at risk to the uncertainty of the housing market. It might be better, because it has sentimental value, to leave the value of your house out of your retirement planning completely.
Navigating retirement planning options can be complex if you trying to do it alone. Let me help you keep your money safe and use financial strategies that right for your financial situation. Don’t forget to download your FREE safe money kit. Then, let’s talk (866) 471-7233. It’s a free consultation.