Using Your House to Fund Your Retirement BML Wealth Management

It is possible for a person to end up in a situation where they have a lot of money in a home but don’t have a lot of money in the bank. If you have been paying off your mortgage for years, your equity in the home could amount to a lot of money. But that isn’t money you can use without making significant financial changes. And just because you have a high-value home, it doesn’t mean that you have a lot of cash on hand for expenses. If you are about to head into retirement and you are concerned about the amount of cash you have on hand, this article will give you a couple of options for what you can do to adjust your financial situation.

A Reverse Mortgage

If you’d like to utilize your home’s value for cash flow, a reverse mortgage is an option but requires careful consideration. A reverse mortgage is a loan that allows a homeowner to borrow against the value of their home. It allows the homeowner to receive payments monthly, as a lump sum, or as a line of credit. The money paid out from this loan is then due back when the borrower dies, moves out permanently, or sells the home.[1] This can be a way to create cash from your equity, but it isn’t a great option for everyone. It has many restrictions. Some of those restrictions are:

  1. You must be 62 years old or older.[2]
  2. You must either own your home or have a substantial amount of equity in the home.[3]
  3. You must pay various fees and premiums to set up and maintain the reverse mortgage.[4]

A Home Equity Loan

A home equity loan is another option if you find yourself with a lot of money in equity and not a lot of money in cash. This is a more traditional loan, and the value is based on the difference between the homeowner’s mortgage balance due and the home’s current market value. Unlike a reverse mortgage, a home equity loan requires monthly payments.[5]

Talk with a Financial Advisor

A financial advisor can look at your unique financial situation and figure out your risks and paths forward. They can help guide you through all your possible options. Financial advisors have expertise in a variety of subjects, from investment strategies to tax strategies, and they can provide you with the information you need to make big financial decisions.

 

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The commentary on this blog reflects the personal opinions, viewpoints, and analyses of BML Wealth Management’s employees providing such comments and should not be regarded as a description of advisory services provided by West Wealth Group, LLC. The views reflected in the commentary are subject to change at any time without notice. Nothing on this blog constitutes investment advice. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future returns.

Investment advisory services through West Wealth Group, LLC, an SEC Registered Investment Adviser. BML Wealth Management and West Wealth Group, LLC are affiliated entities. Insurance Services are offered through BML Wealth & Insurance Services, California Insurance License #0M15550.

We do not provide tax or legal advice. All individuals are encouraged to seek guidance from qualified professionals regarding their personal situation. Any references to protection benefits or steady and reliable income streams in this guide refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products.