Why would the wealthy do a Reverse Mortgage?

This is a great question as most people would see reverse mortgages as a way for those who have no assets (except their house), but need additional income. However, I have had a couple of examples when a client has many other assets, but would rather do a reverse mortgage than to liquidate the assets.

Here’s the typical scenario: A husband and wife are comfortable living in their home and would like to continue to live there in the future. However, one spouse becomes ill, and their illness gets to a point where they will need to either get home care, or, at some point, need to be transferred to a specialized institution for medical assistance. They can choose to liquidate stock, mutual funds, or sell a property in order to finance this expense. However, this triggers some tax implications they are not in favor of. So, as a way to establish a growing line of credit and access cash without any tax implications, the reverse mortgage has become a valuable tool.

Though this is an example of how others have used reverse mortgages, I always encourage my clients to visit with a professional financial advisor and a Reverse Mortgage Specialist like myself, to assist them with identifying the best plan of action. Feel free to contact me if you would like a good referral for a financial advisor that can help you in your unique situation.

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