Reverse Mortgages: Tool to Create Leverage

j0303028For such a long time reverse mortgages have been used as a tool to unlock the equity in the home of seniors in order for them to supplement their cash flow when they find themselves asset rich and cash poor. It is a great solution for many who find themselves wanting to stay in their home, yet find themselves unable to meet the demands of their lifestyle, or simply pay for the unexpected events that life gives. FHA has created a very low risk option by insuring the loans so that the heirs will not be at risk if the loan exceeds the value of the home. However, recently reverse mortgages have been used for more than this. Home equity is cash that is locked up. Is that the best place for it to be? Maybe for some. But what if seniors find themselves paying more income tax than they would like? What if seniors would like to pass on something greater than their home by transferring the cash in the home to an asset that can be used for generations upon generations. When we begin to look at the opportunities that allow seniors to leverage their equity in order to reduce taxes, and/or increase the quality of retirement, then that is where the power of this simple tool can be used.

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