re: Best way to use your house in retirement?

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Is this your opinion regardless of assets, cash flow, income needs, etc?

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Its the best loan ever created for anyone who can get it

Rent it out for swinger parties. Fun AND profit.

All you have to do is think like a Ruston Baptist.

$4500 mortgage when you retired?!?

Gulp….

Tell me more…

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$4500 mortgage when you retired?!? Gulp….

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I’m 3 months in on a 30 year mortgage and it’s $5800 a month. At least I’m doing bi-weekly payments so I’ll have it paid off at 66

Live in it. Make memories in it. Enjoy family gatherings in it. Take care of it. See Father of the Bride (movie) home. That is what envision in retirement. Your home should be the anchor of the family. It is not shared walls with strangers. No one is stomping on your ceiling while you are taking care of elderly relative. You next door neighbor’s dog is heard constantly barking through the walls while your neighbor works and you are trying to take a nap. When you buy groceries, you do not have to walk long distance and up flights of stairs multiple times to bring groceries inside. You should not have to worry about rent going up or having to move out if owner decides to sell.

Reduce it to an “asset” and apply MBA mindset whereby it is a number in a spreadsheet and a transaction and you miss the real value of a home. Take it out of your “balance sheet”.

We are considering Spain for early retirement. We will just rent and invest the money from our home being sold.

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Can have a house sold in 30-45 days. Easy to get out of.


yup. i just sold 2 of mine in 30 days. my current residence might have sold sooner.

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This. It's a misconception that a lease is more flexible. A big one.

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Reverse Mortgage the second i turn 62

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Even though you will get downvotes it's a very valid option. People are basing their opinion on outdated information.

Wade Phau Article from Think Advisor.

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"I was in the same situation as many advisors of knowing about the conventional wisdom, which is that reverse mortgages are generally a bad idea," Pfau said on a webinar for the Financial Planning Association on Wednesday. After joining a study group on the products, he changed his mind, finding reverse mortgages are a "viable retirement income tool" and can be useful in managing sequence risk.

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Borrowers who take out an HECM can choose to take the payment as a lump sum; a tenure payment, which acts as an income annuity and provides a payment as long as they're in the home and remain eligible; a term payment, which provides guaranteed payments over a set term; a line of credit; or a modified tenure or term payment, which carves off part of the line of credit for regular payments. When borrowers choose how to take their payments, they aren't locked in to that decision for the duration of their loan, Pfau said. If they take a term payment and their financial situation changes, they can decide to open a line of credit instead.

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Clients can use the reverse mortgage in combination with their retirement portfolios to pay off an existing mortgage, fund home renovations to age in place or to use the HECM to buy a new home.

Clients can use the HECM to fund their retirement while their portfolios grow, but Pfau noted one risk with that strategy is that in low markets, their portfolios may not grow that much.

Clients can also use the HECM to improve retirement efficiency by taking tenure payments as an alternative to annuities, to support them while they delay Social Security benefits, or to cover taxes for Roth conversions or long-term care insurance premiums. However, "it's important to not use it to fund a new [LTC] policy, but to keep paying premiums on a current policy," Pfau warned.

Finally, an HECM can help preserve credit if borrowers open the reverse mortgage early but don't access the line of credit until they deplete their retirement portfolio.

A reverse mortgage is a non-recourse loan, meaning when the loan comes due, borrowers only have to pay 95% of the appraised value at that time. "If the home had a big drop in value," Pfau said, "the line of credit can grow to be worth more than the value of the home."

In coordinating reverse mortgages with portfolio spending, Pfau said the "Sacks and Sacks" strategy, so named for its authors, brothers Barry and Stephen Sacks, is easier to implement. Under this strategy, clients spend from their reverse mortgage line of credit in years following a bad year for their retirement portfolio. Following years when the portfolio had positive returns, retirees draw from it for retirement income.

The "Texas Tech" strategy follows a similar principle but requires that advisors determine what return their clients would need to make their portfolio last 40 years in retirement and base a wealth glide path on that. When clients' remaining wealth drops below 80% of the glide path number, they turn to their line of credit for income. If their wealth improves, they spend from the portfolio and try to pay down any loan balance on the reverse mortgage, Pfau said.

"With Sacks and Sacks, you don't pay back the reverse mortgage loan balance until the loan comes due at the end of retirement or until you're no longer eligible. With the Texas Tech strategy, you do pay back the loan balance earlier if markets start doing better," he said.

Or, clients can simply spend from their retirement portfolio first, then turn to their line of credit when their portfolio is depleted, or set up a tenure payment to guarantee payment for as long as they're in the home.

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