Social security plays a vital role in retirement planning for seniors. It provides a steady income stream that helps cover day-to-day expenses and ensures a basic level of financial security. However, for many seniors, social security benefits alone may not be sufficient to support their desired lifestyle or cover unexpected expenses.
However Social Security income is simply not enough money to live on, pay on going expenses, unplanned costs, home repairs or medical expenses. And if an older homeowner is still making mortgage payments, it definitely isn’t enough money.
A reverse mortgage can complement social security benefits by providing seniors with additional funds to meet their financial needs. By accessing their home equity through a reverse mortgage, seniors can enhance their financial situation and have the freedom to enjoy their retirement years to the fullest.
It is important to note that a reverse mortgage does not affect social security or Medicare or MediCal benefits. The funds received from a reverse mortgage are not considered to be income but an advance of the home’s equity, and not taxable income. Therefore, seniors can continue to receive their Social Security benefits without any reduction or penalty.
As we age, financial stability becomes crucial, especially for seniors who are living on fixed incomes. With rising costs of living and increasing medical expenses, many seniors find it challenging to make ends meet. This financial burden can lead to stress and anxiety, impacting their overall well-being. However, there is a solution that is empowering seniors in Los Angeles and southern California. Reverse mortgages.
A reverse mortgage is a unique financial tool that allows homeowners aged 62 and above to convert a portion of their home equity into tax-free cash, without the need to sell their property or make monthly mortgage payments. This financial option has become increasingly popular among seniors in California, providing them with a lifeline to financial freedom.
But if they choose to use a Jumbo reverse loan, the minimum age is 55 not 62. Jumbo reverse loans are for “high value” properties up to 4 MM loan amounts.
One of the primary challenges seniors face is the limited income they receive after retirement. Most seniors rely on their pension, savings, and social security benefits as their primary source of income. However, these sources may not be sufficient to cover all their living expenses, including healthcare costs. With a reverse mortgage, seniors can tap into the equity they have built in their homes over the years, providing them with an additional source of income to supplement their fixed income.
Moreover, reverse mortgages offer flexibility in how seniors can receive their funds. They can choose to receive a lump sum payment, a line of credit, or monthly installments, depending on their financial needs and goals. This flexibility allows seniors to tailor their reverse mortgage to their specific circumstances, ensuring they have the funds they need when they need them.
Reverse loans are highly regulated and the senior consumer is well protected from any type of financial abuse and over the last decade many regulations have been put into place which makes a reverse loan a very safe option for seniors to use.
Before anyone can start the loan process, they must complete HUD Counseling with an approved Counseling agency and they can ask questions and discuss their concerns with the counselor.
A list is provided to the potential borrower with a proposal provided by the Loan Officer that offer many counseling agencies for them to chose from.
All fees are disclosed in the proposal, and can be discussed with the Loan Officer. Along with federal regulations and disclosures, each state has their own set as well.
Spouses who are under the minimum age 62 will be able to remain in their home if the older borrowing spouse predeceases them, and no longer have to worry about selling and moving out of their home.
Seniors are worried about out-living their money, and with medical expenses, care giving costs, utilities, food and other monthly expenses, funds from a reverse loan can make life easier and certainly remove the stress and worry about running out of money.
They are a very safe and sensible option on how to use the equity in your home, for funding and preserving your retirement and could be an important part of a financial strategy to make your savings last longer.
As I am writing this post, it was noted today that inflation has increased to 7%, the highest it has been in many years, and although, I am not an economist or a financial advisor, and certainly not qualified to discuss why this is happening, I do know that it is affecting how much a dollar can buy.
Most seniors are on fixed incomes, and sometimes they only have social security to rely upon to use towards their monthly expenses. There was a slight increase for 2022, but it is essentially wiped out due to the increase costs of food, utilities, and goods.
Given the costs of medical insurance, unplanned medical expenses, or home repairs and maintenance, many seniors do not have enough money each month to cover even their essential and ongoing expenses.
My more recent reverse loan clients are taking advantage of historically low mortgage interest rates, and increased equity in their homes and are refinancing and using a reverse loan to eliminate their concerns about running out of money.
They have no mortgage payments, access to their equity for additional income, and still own their home.
Life is so uncertain at this time, due to the Pandemic and social issues, but at the least funds from a reverse loan could be an antidote for financial insecurity.
The last 18 months of life for everyone has been very hard and uncertain due to the Covid-19 pandemic. It was particularly frightening for seniors because they were more likely to become ill with it and possibly die.
No one was left untouched by it, either by death or the loss of employment and most certainly the loss of structure and a feeling of safety.
I received many calls from seniors during this time, very afraid about running out of money and trying to take care of themselves, and at the same time, cut off from their families and feeling isolated.
Some had entered into forbearance agreements on their mortgages and the payments for them were paused, but they were now being notified by their Lender to resume them, and many did not have the income to start making payments again.
I received many calls for help, and I was able to provide everyone a reverse loan and at the least, make them feel a bit safer and and less anxious about what was going to happen to them.
It was challenging when we couldn’t meet personally, but I made it work for each client and we got through it together.
I am grateful that it seems we are moving forward with more confidence and less fear, and I am also grateful that I was able to help many seniors last year by providing them with more money and peace of mind and we survived the pandemic together.