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Phone: 979-693-0201 Email: [email protected]

Myke Leatham | Brazos County Realty

Myke Leatham | Brazos County Realty

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Can a Reverse Mortgage Allow You to Retire Sooner?

March 6, 2020 by Myke Leatham

There are so many incredible financial benefits to owning a home and to this day it is considered to be one of the safest long-term investments you can make. When you buy a home you almost immediately begin building equity, and you can also expect the property to increase in value over time as well. While there are various pros and cons in the debate of renting vs owning, one major benefit of being a homeowner is that if you live in the home long-term and eventually pay it off, you can look forward to living rent and payment-free when you get ready to retire. Home equity is not something to ignore as it is something that you can tap into if you need cash in an emergency situation, or it can even be a part of long-term retirement planning. 

Planning for retirement is extremely important – we all work very hard throughout our adult lives and it’s important that the work pays off during our Golden Years and that we can live happily and peacefully knowing our basic needs are taken care of. No matter what your financial plan for retirement entails all that matters is that you get started early and stay consistent with your contributions. There’s research and data out there that shows disappointing and scary statistics about individuals nearing retirement age who have less than $100,000 in savings. Even retirees who have been successful in saving and planning are still concerned about having enough because of the rising cost of medical care combined with increased life expectancy. A major component of wealth and retirement planning that is often forgotten about is home equity. There are various ways to factor in home equity into a retirement plan, but a reverse mortgage is a solid option that is ignored, and many retirees don’t know that it exists as a possibility or don’t understand how to take advantage of it. 

What is a Reverse Mortgage?

A reverse mortgage is a type of loan that allows the homeowner to withdraw a portion of their equity without having to repay the loan until they leave the house. One of the most popular types of reverse mortgages available is the Home Equity Conversion Mortgage (HECM), which is insured by the federal government. A reverse mortgage is an opportunity for owners over the age of 62 who own their homes outright or have a considerable amount of equity to tap into. The most common question in regard to a reverse mortgage is why anyone would want to borrow against a home that they worked so hard to pay off – why wouldn’t a retiree want to stay in their home and live there debt free? Instead, seniors facing retirement are more concerned with how they are going to afford their existing lifestyle once they retire and will no longer be cashing a consistent paycheck. A reverse mortgage provides a solution to this issue so that this group of individuals can enjoy a more financially secure retirement as they age. 

So, who is eligible to apply for or receive a reverse mortgage? The primary homeowner must be at least 62 years old in order to apply. Additional eligibility criteria includes:

  • You must own your home outright or have a single primary lien that you hope to borrow against. 
  • If there is an existing mortgage, then it must be paid off using the proceeds from the reverse mortgage. 
  • You must live in the home as your primary residence. 
  • The borrower must be current on property taxes, homeowner’s insurance and any additional obligations like homeowner’s association dues. 
  • The borrower will need to take part in a consumer information session that is led by a HUD-approved counselor. 
  • The property will need to be well-maintained and kept in good working condition. 
  • The property in question must be a single-family home, a multi-unit property with no more than four units, a manufactured home built after June 1976, a condominium or a townhouse. 

If the above requirements are fulfilled, then you will need to work with your lender to work through the process of getting a reverse mortgage. One important note to keep in mind is that even if the property is completely paid off, you may not be able to borrow the full value of the home. The amount you can borrow, which is also known as the principal limit, will vary based on the age of the youngest borrower, current interest rates, the value of the home and the mortgage limit set for a Home Equity Conversion Mortgage. In general, you are likely to receive a higher principal limit if you are older, if your home is worth more and if interest rates are low. Borrowers will also have the opportunity to choose a HECM with a variable or fixed interest rate. With a fixed rate you will receive a single lump sum payment. If you select a reverse mortgage with a variable rate, then you can choose to accept:

  • Equal monthly payments
  • Equal monthly payments for a pre-determined amount of time that is agreed upon ahead of time
  • A combination of a line of credit and fixed monthly payments for as long as you live in the home
  • A combination of a line of credit and fixed monthly payments for a pre-determined length of time

The money that is borrowed as a reverse mortgage does not need to be repaid until the borrower passes, moves out or leaves the property for any reason. 

If you are interested in applying for a reverse mortgage the application process is similar to that of a traditional home equity loan. If you meet the eligibility requirements then you can shop around for the best deal and work with a lender to assess how much you can borrow. 

Can a Reverse Mortgage Allow you to Retire Sooner?

Now that we’re all caught up on what a reverse mortgage is and what the requirements are to qualify, let’s talk about the benefits and how you can use it as a tool to plan for retirement. More often than not, a reverse mortgage is used as a quick fix for cash or a last resort if all else fails. This Hail Mary mentality can be easily avoided by working with a competent and responsible financial advisor who can put an organized plan in place that includes long-term care planning, improving cash flow, mitigating returns risks in the event of a market crash and providing peace of mind for your Golden Years. An important piece of advice to keep in mind is that most people have no idea what they next three or five years of their life will look like, much less the next 20 to 30 years, so it’s impossible to plan with an open-mind and be flexible so that you can handle whatever life throws your way. 

Older homeowners are currently finding that they are sitting on record levels of home equity, and even though the upfront costs of a reverse mortgage can be quite high, they are finding it to be a very valuable tool for retirement. The best way to utilize a reverse mortgage as a tool to plan for retirement is to make your monthly payments to pay down your mortgage and gain more equity in your home. When you buy your home, if you are absolutely certain that you will live in this property forever, then you can count on the equity you build as a source of wealth when you retire. If you are unsure whether you will need a bigger or smaller home, if there is a chance that you have to move for work or family, or if there’s another reason that forces you out of your home then you won’t be able to depend on the equity you’ve built as a way to retire sooner. 

Many of us dream of retiring early, and even though the average retirement age in the US is 63 years old there are many Americans who are able to retire even earlier with careful planning. By starting to save early, being disciplined and creative you may be able to reach your goal of retirement sooner than expected. At Brazos County Realty we pride ourselves on providing our clients with the information and resources they need to make a well-informed decision regarding real estate in the Bryan College Station area. If purchasing and investing in real estate is part of your retirement plan, then please don’t hesitate to tap into our knowledge and give us the opportunity to help you achieve your financial goals. Our team boasts years of experience working with buyers, sellers and investors locating unique opportunities at favorable prices. Please contact us if you’d like to learn more about our featured properties for sale, or if you would like to discuss your long-term goals for real estate and how this could help you plan for retirement. We look forward to hearing from you soon!

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Category: Blog

About Myke Leatham

I’m so glad you found me – your College Station and Bryan, TX real estate source! When you choose to buy or sell a home in College Station/Bryan, TX or other surrounding areas using our expert services, you will receive a free consultation to determine your needs, free listings, and free reports sent to you by email. These weekly reports will show you how hard the members of my team are working to accomplish your property goals, and we guarantee the best service and consultation you have ever experienced. You’ll find the best community information for the College Station, Texas region right here.

It’s nice to know YOUR Realtor will still be of service after the sale.

Experience Counts: Broker/Owner of Brazos County Realty
Over 25 years of sales experience. With past ABR, GRI, CRS, & Epro designations.
Continuing education in real estate: Education is paramount in an ever changing industry like Real Estate. Myke has taken over 1000 hours of real estate specific courses which include but are not limited to: Residential Appraisal, Marketing, Law Contracts I & II, Finance, Residential Inspections, Principles and Practice, Law of Agency, Code of Ethics, Bankruptcy/Easements/Surveys/and Probate, Home Warranties, 1031 Exchanges and hundreds of hours of extensive real estate training.

Reputation: SALES LEADER since 1998; Top Producer 2000 through 2009. Listed among the top agents in the county. Consistently ranked among top realtors for total sales volume out of 900 realtors for commercial and residential real estate in the Bryan/College Station, TX area. When Myke represents buyers, she presents all viable options to her clients, including those properties that are not officially listed, but could be available for sale based on her inside information. Her expertise lies with investors and marketing homes of all price ranges in College Station/Bryan to local, national and global buyers, across all major media channels and through her extensive, personal network of contacts.

Myke is among the top 1% of all Realtors in North America!
She has earned the Designations of ABR (Accredited Buyers Representative), CRS(Certified Residential Specialist), GRI (Graduate of Realtors Institute)CHMS (Certified Home Marketing Specialist), and E-pro (Certified Internet Professional)
Fewer than 3% of all Realtors nationwide earn these certifications. They are not only a symbol of Myke’s commitment to this business, but these designations are your assurance of a skilled, trained real estate professional.

Myke is a consummate real estate professional who not only understands the art of deal-making, but also the art of relationships. She makes the process of buying and selling homes an uplifting and fun experience. She has a tremendous appreciation for Bryan and College Station, its rich history, and Texas A&M traditions having lived in the area for 25 years. Her knowledge of Bryan/College Station’s real estate market and market trends is unparalleled. Having been personally involved with clients through their remodeling, purchasing and selling processes, she knows intrinsic quality and value when she sees it. When she doesn’t see it she lets her clients know, without hesitation.
Myke’s proven track record and affiliations in the field of real estate demonstrates her high level of professionalism.

* High energy and enthusiasm
* Aggressive marketing
* Expert negotiating skills
* Ability to listen and ascertain customer’s desires and needs
* Fun to be with
* Internet savvy
* Because Myke is an experienced investor, she quickly helps her customers locate and define good business opportunities. No one likes the feeling of being ‘sold to’ so Myke provides as much information as possible to help you make the right decision.

Personal Commitment:
I am prepared to go the ‘Extra Mile’ for you, because I understand the financial and emotional significance of purchasing and selling your home. I will carefully listen to your desires and arrive at a workable plan. I believe sensitivity, listening, and service are important keys to success.
Whether you are buying or selling a home or you are just curious about your home’s market value, I’d be happy to provide my market expertise and intelectual property without obligation, or meet with you to evaluate your home for future reference. I want my customers to have a great time and enjoy the total process of purchasing or selling property. It gives me great pride when my customerspass my name on to their friends and family. I will continue to work hard to make sure critical information is available at www.AggieRealEstate.com and I invite all interested investors to search my site for cash flow opportunities. I will dedicate my time and talents to helping you achieve your goals. It is my goal to make your buying and selling experience extraordinary. Look closely and you’ll see how much I love meeting and working with people. You’ll experience the difference in working with an experienced and dedicated professional.

Personal information:
Michelle goes by ‘Myke’ and is the proud mother of 6 children – 3 girls and 3 boys. Her husband is David Leatham. They met at Brigham Young University. They have been married since 1977. David is a finance professor, and Associate Head over graduate studies in the Agricultural Economics Department at Texas A&M University, and speaks fluent Spanish. They have lived in College Station since 1983 and loved every minute of it. Myke loves to quilt, sing, swim, ‘sing’, bake bread, ‘sing,’ garden, ‘sing’, sell real estate, and ‘sing some more’ :-). Family, church, and real estate consume most of her time. Truth, honor, integrity, kindness, loyalty, gratitude, and service are very important words to her.

Slogan: ‘Let Myke Help You With Your HOMEwork!’

Referrals: The highest compliment I can get is when you pass my name on to others or post a kind remark on the internet. When you send your friends and family my way, I’ll always provide them with the highest quality of service that I know you would appreciate. Thanks in advance for all your support and friendship.

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