- Well-funded – You have enough money to support your expected needs and wants. Adding a RMLOC as a standby or emergency fund provides significant advantages over a traditional HELOC including guaranteed credit limit growth that is not dependent on the value of your home and can even exceed it.
- Constrained – You have Social Security or a pension and a medium-sized investment portfolio. Your retirement plan is acceptable, but it may require significant lifestyle tradeoffs. You may have no cushion to absorb unplanned events such as higher medical costs or greater longevity. Adding a RMLOC to be used strategically in combination with your investment portfolio or other assets will especially benefit you.
- Under-funded – You may need cash flow immediately because you have already exhausted all your other resources. You have the greatest need for a reverse mortgage, but if your home is paid off or you have significant equity you can gain a tremendous boost from the use of a RMLOC. The challenge will be to maintain financial discipline and use the RMLOC judiciously to gain the greatest long-term advantage.
Even with savings and a paid-off home, many people still face the prospect of running out of money as they age, but recent research shows that strategically combining a Reverse Mortgage Line of Credit (RMLOC) with an investment portfolio can significantly extend the life of your savings. And if you are fortunate enough to enter retirement well-funded, this combination can actually increase the estate you’ll leave your heirs. How to use a Reverse Mortgage to your benefit will depend upon your financial profile:
ABOUT THE Author
Michael Melody has been a Mortgage professional in Southern California since
1990. Now based in Huntington Beach, Kevin assists buyers and sellers of
residential property with all their financing needs, with a special emphasis on
"Old School" personal service. He uses his more than two decades of
experience in mortgage lending and residential Real Estate to take his clients
from start to finish on any type of transaction. Sellers can take advantage of
his intimate knowledge of financing to pre-screen buyers and offer creative
solutions for self-employed individuals, business owners and otherwise
well-qualified buyers who may not fit traditional lending guidelines. He also assists
homeowners looking to refinance to a better rate or lower payment, consolidate
debts or get cash for home improvements, and even families whose homes are
underwater can be helped under Fannie Mae's Home Affordable Refinance Program
(HARP) and Freddie Mac's Open Access Relief Refinance for owner-occupied
single-family homes, condos, manufactured homes, and 2-4 unit residential
income properties, as well as vacation homes, rentals and investment property.
Kevin is a proud veteran of the United States Air Force, and author of the 2001
book "What Lenders Don't Want You To Know."