The vast majority of us in our late 50s and early 60s, begin considering what retirement is looking like, and often it’s bleak, so we scramble and hopefully increase our retirement ability. A reverse mortgage may serve as both a retirement tool and give the borrower a level of financial liquidity and flexibility. You convert a percentage of your home's equity into tax-free cash, as a line of credit, a lump sum, a monthly payment, or a combination of the three.

When considering a reverse mortgage, you need to move methodically, and make sure you understand the different choices available to you. The U.S. Department of Housing & Urban Development (HUD) designed a counseling portion to ensure a level of understanding. Unlike a regular mortgage that reduces over time, because you’re making monthly principal and interest payments, a reverse mortgage gets larger. Why? You’re being charged interest and mortgage insurance (HUD – FHA insured loan) on your reverse mortgage’s outstanding balance. You may make a monthly payment on a reverse mortgage, but the majority of borrowers choose not to. They want to remain in their homes and don’t want to make principal and interest payments anymore.

Let’s talk retirement

The 65-plus population in this country is growing at a rate of 10,000 to 11,000 daily, and our life expectancy has increased – the world is getting "grayer." That means we need to figure out how to find a solution to our new reality. Do we work longer or try to save more of our income? For many, these options are not a feasible solution.

If we re-think how we look at our homes, it may open another possibility. Now we see our house as part of our legacy, which is wonderful, but we need to see it as an asset – and it may be your largest asset. Now it’s not just your retirement savings or retirement pension: your home may be the answer to your retirement dilemma.

If you are working with a financial planner or estate-planning attorney, she or he may have you consider using your reverse mortgage for portfolio coordination, spending home equity first to leverage your portfolio’s upside potential, or as a Social Security delay bridge.

Nobel prize-winning economist Robert Merton said, “The house is like an annuity: It provides the housing you need for as many years as you need it.” It will also provide the foundation for funding your retirement, so smile!

Dirk Gray is a reverse mortgage specialist with Frost Mortgage Lending, and for 28 years was an accredited instructor for the New Mexico Real Estate Commission. He may be reached at 505-930-1953 or



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