Kay Johnson, a reverse loan specialist with Bainbridge Lending Group says reverse mortgages offer the ability to access a portion of your home’s equity for a variety of reasons.
“Let’s face it…most of us are feeling the impact of today’s higher cost of living with increased debt. With mounting expenses and limited income sources, seniors are overwhelmingly impacted and feeling the pinch. Often, when this happens, many believe their only option is to sell the home they love and move into a smaller home or apartment. However, with the substantial increase in home prices in WA State combined with high interest rates and limited inventory, downsizing doesn’t offer the same relief that it once did,” says Johnson.
“Once regarded as a loan of last resort, this is no longer the case. We are now seeing mass affluent homeowners also taking advantage of the benefits reverse mortgages offer. Many financial planners and attorneys are also becoming more knowledgeable on these loans and can provide additional advice,” says Johnson.
Reverse mortgages allow you to tap into a portion of your home’s equity for various purposes. Whether it’s financing a home remodel, aging in place, or paying off high-interest credit cards and other debts, they offer versatile financial solutions.
One of the biggest benefits for homeowners is that unlike traditional cash-out refinancing or home equity lines of credit, reverse mortgages do not require a monthly payment – payments are optional. However, you must continue to live in the home as your primary residence, maintain it and pay your property taxes, homeowner’s insurance and any HOA or condo dues (if applicable).
Here are the five most common reasons Johnson’s clients obtain a reverse mortgage:
1. Pay off an existing mortgage balance and/or eliminate other debt. With credit card interest rates now between 20-30 per cent, this is a great way to enhance your monthly budget.
2. Fund a home remodel or tackle needed repairs – clients often access cash to renovate their current home, allowing them to age in place.
3. Establish an additional income source – accessing equity can eliminate the need to take withdrawals from other managed asset accounts (which are often taxable). Additionally, it can help early retirees delay the need to take Social Security benefits earlier than needed.
4. Establish a line of credit (some reverse loans offer this) – have an emergency fund that can be accessed when needed for unplanned expenses.
5. Purchase a better-suited primary residence using a HECM for a reverse mortgage – this involves putting down a substantial down payment (typically from the sale of departing residence) along with a reverse mortgage to pay the difference. This results again in having an optional monthly mortgage payment and gives you an alternative to paying all cash. The amount needed for a downpayment varies based on age of youngest borrower, value of home purchasing and interest rates.
An increasing number of seniors are also going through divorces. A reverse mortgage can provide a practical solution to enable one spouse to remain in the marital home while helping to access funds to potentially buy out the other spouse’s share of the property.
With over six years’ experience in reverse lending, Johnson has noticed the growing acceptance and understanding of these loans. She’s also seen the increase in reverse mortgage loans in Kitsap County and throughout the entire Puget Sound region.
Johnson advises, “If you’re contemplating a reverse mortgage, I highly recommend you speak to an experienced local reverse mortgage specialist who will take all the time necessary to educate you on the different loan options, answer your questions, and help you from start to finish,” Johnson says. “Calling an out-of-state lender advertising on TV will typically result in an impersonal experience and place you in a high pressure call center’s database. Reach out and let’s have a conversation.”
To learn more about reverse mortgage options in Washington state or to request a reverse mortgage quote, contact Kay Johnson, NMLS #1647924, at Bainbridge Lending Group, NMLS #42059. Call 206-451-4024 or email Kay@BLGLoans.com. You can also visit our website at this link: EquityforRetirement.com
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