With the stock market experiencing painful losses in 2022, you might wish you had another way to pay bills that didn’t involve selling investments while they are down. If you are a homeowner with more than 50% equity in your property, there may be a way to do that.
Reverse mortgages are available to homeowners aged 62 and older. They allow you to take equity out of the house and not make any payments back to the bank as long as you are living in the home.
The house is still yours, with a lien on the property that grows by the interested owed. Similar to the regular mortgage you are used to, you own the property along with the bank. When you sell, move, or pass away, you (or your heirs) sell the home and pay the bank back the loan that has accrued.
Keep in mind that if you don’t pay your property taxes, insurance, and HOA dues, your home could be foreclosed on. This is THE SAME as a regular (aka forward) mortgage that you are familiar with.
One way to use a reverse mortgage for portfolio is to take out a Home Equity Line of Credit. You only tap into the credit when you need to, can pay it back if you want, or don’t have to pay it back until you vacate the house.
Having this equity available to tap into can allow you to pay your bills without selling stock investments during volatile times.
This isn’t the answer for everyone, but certainly something to consider if you have hundreds of thousands of dollars locked into your home but feel a squeeze when it comes to retirement spending. If you would like referrals to reverse mortgage experts, e-mail me and I’ll send you some names.