I’m attempting to help a single person in their 90s identify possible options to get cash from their home equity. I’m just coming up to speed, so any thoughts/comments would be greatly appreciated.
The person is single, in their 90s, has an existing 200k mortgage at < 3% interest rate and a home value about 800k. Income is almost all from Social Security and their savings fund has been reduced to a small amount; hence the need for more money.
With the current high interest rates, a cash-out refi doesn’t seem like a good option.
A HELOC or similar loan doesn’t appear to be an option, since there is no income to repay the loan (this is not a short-term cash need, but an ongoing need throughout their remaining retirement).
So, maybe a HECM reverse mortgage is a better option in this situation?
Please let me know if there are other options they should be considering.
It looks like a HECM has a relatively large upfront cost and would acquire the current 200k mortgage (basically turn the sub 3% mortgage rate into a mortgage rate >6%). The person wouldn’t need to repay these HECM Mandatory Obligations (or the funds withdrawn from the HECM Principle Limit), but it would reduce the remaining home equity. Which probably more affects the beneficiaries and makes it more difficult for them to keep the home in the family (if that’s desired). But funding the person’s retirement is the priority.
Wondering how a HECM could affect possible future VA benefits (just need to spend the funds withdrawn from the HECM, before becoming eligible for VA benefits?)
Would a durable power of attorney have any authority related to the HECM?
Also, with easy access to such a large amount of money (HECM Principal Limit), any thoughts to help prevent senior fraud / financial exploitation by others.
I bought Wade Pfau’s book on reverse mortgage and started searching Bogleheads related threads, but again would appreciate any thoughts or comments.
Thanks in advance…
The person is single, in their 90s, has an existing 200k mortgage at < 3% interest rate and a home value about 800k. Income is almost all from Social Security and their savings fund has been reduced to a small amount; hence the need for more money.
With the current high interest rates, a cash-out refi doesn’t seem like a good option.
A HELOC or similar loan doesn’t appear to be an option, since there is no income to repay the loan (this is not a short-term cash need, but an ongoing need throughout their remaining retirement).
So, maybe a HECM reverse mortgage is a better option in this situation?
Please let me know if there are other options they should be considering.
It looks like a HECM has a relatively large upfront cost and would acquire the current 200k mortgage (basically turn the sub 3% mortgage rate into a mortgage rate >6%). The person wouldn’t need to repay these HECM Mandatory Obligations (or the funds withdrawn from the HECM Principle Limit), but it would reduce the remaining home equity. Which probably more affects the beneficiaries and makes it more difficult for them to keep the home in the family (if that’s desired). But funding the person’s retirement is the priority.
Wondering how a HECM could affect possible future VA benefits (just need to spend the funds withdrawn from the HECM, before becoming eligible for VA benefits?)
Would a durable power of attorney have any authority related to the HECM?
Also, with easy access to such a large amount of money (HECM Principal Limit), any thoughts to help prevent senior fraud / financial exploitation by others.
I bought Wade Pfau’s book on reverse mortgage and started searching Bogleheads related threads, but again would appreciate any thoughts or comments.
Thanks in advance…
Statistics: Posted by egghead — Sun Nov 03, 2024 7:37 pm — Replies 2 — Views 189