Leaving a financial legacy , Seniors can do much more with retirement income than pay off homes!

Imagine working your whole life and paying every on time or early. You have done all the right things, raised your children, and worked for 40 years on a good job. Now you are retired and drawing a fixed income of $3500.00 per month from your pension and social security. You are also like many American seniors who are still paying a mortgage. You live in a $250,000.00 house but you have paid down your mortgage so you only have $100,000.00 left to pay before you house is paid off. Now when you got this mortgage you were ten years from retiring and earning $70,000.00 per year on a full-time job. The mortgage payment of $1700.00 per month represented less than 30% of your income but now in retirement the mortgage payment is now 50% of your monthly income. Taxes, insurance, utilities and medical expenses  have almost all disposable income going to bills. With 20 years left to pay on this mortgage and a life expectancy of 85 you might be paying for this property for the rest of your life.

But there is a great option that creates additional income and provides an opportunity to leave a much greater financial legacy than bill paying ever will. Instead of mortgage payments for the next 20 years you could create a great financial nest egg with the same money. Most never consider this option because they want to pay off the house and leave it to their kids(who already have homes of their own, and will sell your house as soon as they are able)

Lets assume $1500.00 a month was going to principal and interest and $200.00 was going to taxes and insurance. If you stopped paying a mortgage and started sending $1500.00 a month to a saving account paying 5% over the same 20 year period of time you would amass $620,619.46. So the same dollars that only pay off a house could have built up a huge financial legacy for your heirs. In addition, it could have acted as a safety net in case you fall on financial hard times.

For many seniors once they retire their retirement income is so low they can’t qualify for a home loan because their debt to income level in too high.   Most live on a lower fixed income than they had while they were working. With 85% of American’s net worth is in real estate equity and 65 %to 70% of the wealth belongs to seniors. This reality creates a huge problem or a huge opportunity. Being equity rich and cash poor is a disaster waiting to happen.

The reverse mortgage is one of the few government programs that actually performs as promised, if you use it properly. Advice form a great mortgage adviser and a great investment advisor can be invaluable. I hear more mythology about these products which is far from the truth and has seniors scared to death.

This is a mortgage that accrues interest instead of one that you pay monthly.  It is not you signing over you home to the bank. I have heard people say these mortgages are for poor people who can’t pay their mortgages . Everyday I see wealthy people use these mortgages to capture the equity in their properties and move the money to savings accounts where they can keep the growth.

Don’t let misinformation steal your opportunity. Get educated. Why would a person take half their income for 20 years to pay off a house when they could amass over $600,000.00?  Only because they don’t know any better. If people knew better they would do better.

For more information please contact my mortgage planner Omar Smith 443-271-5952 and get all the facts.

Wishing you Wealth Wellness and Wisdom

Manager of Wealth

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