Reverse Mortgage? Free and Clear? Mortgage?

Some retirees find themselves sitting on a large equity pool from the family home they no longer need. There are a variety of options in this scenario especially when downsizing the home. Owning a home free and clear is often a goal for people when they retire. This can be an excellent tool for maintaining a similar lifestyle in retirement as enjoyed in the working years. Having a home free and clear is ideal for people that want to leave a legacy inheritance for future generations. If this path is chosen people should be mindful of scams that aim to secure title away from the owner. When a bank has a lien on a property it is much more difficult for title thieves to get at your property. This is one advantage to having a small first position lien against the home.

Some retirees that have strong fixed income may choose to hold on to their cash and carry a traditional mortgage note through retirement. There can be tax advantages to this position if income levels are high enough and other tax deductible schedule A items are present. It also helps to keep title thieves at bay with a lender lien in place.

The reverse mortgage can be a great way to ensure stable living arrangements till death do you part. Sometimes depending on the age of the applicants income can be derived from this method as well. This can be a good way to go for retirees that are house rich and cash poor or are carrying a smallish mortgage of 30-50% LTV. A reverse can eliminate the payment and carry a payment free home until the owner no longer lives there. It is possible to purchase a home with a reverse mortgage as well as refinance into a reverse from an existing free and clear house or even a financed home when LTVs are low enough. Age plays a major role in the value of a reverse mortgage. 

All three of these can be solid options but retirees should be careful to check with a qualified tax accountant and or their attorney to be sure they understand the ramifications of each scenario. Washington State does have favorable programs for senior citizen residents from property tax deferral and reductions to generous terms on reverse mortgages. 

Western Washington remains a great place to retire with year round mild weather and spectacular scenery.