Transfer of Equity with Reverse Mortgages

RetiredOver the years reverse mortgages have been used for a variety of reasons. It simply may be to help with the shortfall in cash flow from month to month, or to pay for future medical expenses, such as long term care, or to simply have an emergency fund to assist with potential home repairs in the future. There are unlimited reasons that a reverse mortgage can be beneficial.

One often overlooked reason to do a reverse mortgage may be what I call a Transfer of Equity. Many people who are retired may look at their home as a form of inheritance for their children. They may not have a lot to pass down in the form of assets, but they do have real estate, something that will grow in value over time, and will provide an inheritance to heirs.

In talking with people in their retirement years, one of their desires during this time of their lives is to travel. Some would enjoy a beach house, or a mountain cabin that they can spend short or longer periods of time away from their home and further enjoy this period of their life. Real estate is deeded property and can be passed on to their heirs just like their home. Many, though they would like this, also realize that they don’t necessarily have the funds to make monthly payments on such investments.

Today, with lending limits at $625,500 across the country for HECM loans, coupled with the fact that real estate values are at all time lows, it is a great opportunity to take advantage of living out those dreams. The reality is that owning another property would allow for appreciated growth in not one property, but two, and not be required to make any monthly payments . . . ever. Deeded properties may include properties such as condominiums or even fractional ownership properties located typically in resorts around the world. For those who like to travel once a year for a nice get-a-way, you can “own” property for a period of time each year. The property appreciates over time, and it can be an opportunity to share with loved ones, and thus passed on from one generation to another, just like any other type of deeded proprty. It can provide the opportunity to build memories and continue to give in a way that the whole family can enjoy!

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One Comment on “Transfer of Equity with Reverse Mortgages”

  1. This is a great way of applying reverse mortgage to the max, ‘exploiting’ it to fulfill our dream lives.

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