Silver Divorce
You might be going through, or considering, a separation or divorce but the end of a relationship does not necessarily mean that you will have to sell your home. Your home may be able to give both partners a new start. For many, their home is their largest asset and where most of their net worth has accumulated. There are mortgage products available that can allow you to buy out the other party while enabling you to stay in your home. A divorce or separation doesn’t always mean you will have to sell your property. You will require a finalized separation or divorce agreement, as that is required by the lender and the agreement needs to clearly detail the asset allocation and any joint debts that need to be cleared. The mortgage funds can only be used to buyout the other party’s equity the home unless it is clearly laid out in the separation agreement that some joint debts need to be paid out to a maximum of 95% of the value of the property. The property must be your primary residence. Sometimes friends or siblings have bought a home and live together in the property. This program may be used in that circumstance also, but this will require an exception for an approval by the mortgage insurer. There are insured mortgage programs available that could help you stay in your home in the event of a separation, divorce or dissolution of a relationship by purchasing the home from your ex-spouse or partner for up to 95% of the home’s value. To qualify for this program you must be able to afford the mortgage payment on your own along with your other liabilities. Not only must the lender approve your application but also a mortgage insurer. Both parties must also be on title on the home prior to the separation. There are some differences between two of the programs. With the first mortgage insurer, the funds can only be used for a spousal buy-out or the dissolution of a relationship. This could be friends, relatives, etc. There cannot be any matrimonial debts or pre-payment penalties or fees included in the new financing. With the other mortgage insurer, the funds can only be used for a spousal buy-out and no other relationship breakdown but the new financing can include matrimonial debts if they are listed on the separation or divorce agreement. They will also allow pre-payment penalties and fees to be included. To qualify for both of these programs you must have good credit and earn sufficient income to support the mortgage payments. It’s so important to seek the advice of a mortgage broker very early in the process, as they can guide you along the way to a successful separation so you can both have the best possible outcome going forward. If you already have a separation agreement in place, they can show you how the value in your home can make it work out for you both. If you have any questions on this program, please give me a call at 1-941-624-4804 or email me at todd@homeforlifefl.com
5 Sources of Retirement Income You Probably Haven’t Considered Yet
If your retirement budget is feeling tight, consider these extra income sources. Planning for retirement can involve a lot of number crunching and strategy to ensure you’ll have enough money to live the life you want. While most people think of their investment accounts and Social Security as their main sources of retirement income, you may have quite a few other options available to you to help make sure you get to live your golden years in style. Here are five sources of retirement income you probably haven’t considered yet. 1. Home equity If you own your home outright, it may be a viable source for additional income in retirement. You could simply sell your home, downsizing to a smaller house. Doing so would give you access to a portion of the equity previously stuck in your home. You could spend the proceeds immediately or invest it for the future. Another option is to stay in your home and refinance. You may use a cash-out refinance to tap the equity in your home. The drawback of a cash-out refi is that you’ll now have a monthly mortgage payment to make. If that isn’t in your retirement budget, you may want to consider another option. A reverse mortgage is a home loan that uses the equity in your house, but it doesn’t need to be repaid with monthly installments. Instead, the mortgage company will recoup its loan when the property is sold. There are several ways to structure a reverse mortgage, and you could receive monthly income from your home. The biggest drawbacks of a reverse mortgage are that the interest rate is variable and they can have hefty up-front costs. 2. Annuities If you can lock in a great interest rate on a fixed annuity, it might be worth exploring the option for retirement. An annuity is a contract with an insurance company that will pay out a certain amount of money to you on a regular basis for the life of the contract. You can buy a lifetime annuity that will pay you every month until you pass away. That said, there are a lot of pitfalls with annuities. Some have hefty upfront costs and charge high ongoing fees. Be sure to understand the rate of return you’ll get on your money in the annuity and make sure the benefits outweigh the costs. 3. Health savings accounts You may have some money lying around in a health savings account that could be used as a source of retirement income. A health savings account, or HSA, is a special tax-advantaged account designed to help people with high-deductible health insurance plans pay for medical care. Employers will often help fund the account as part of their company-sponsored insurance benefit. There’s a tax benefit to using your HSA funds to pay for qualified medical expenses. However, the great thing about an HSA is that when you turn 65, you can use the funds for anything. The only catch is that you’ll have to pay income tax on the distributions. If you have an HSA and you don’t have a lot of medical expenses, you can look into investing the money in the account with the goal of saving it for retirement. If a medical emergency comes up along the way, you can always tap those funds early. 4. Rental income When people think of rental income, they think of owning a duplex or apartment building and renting it out. But you can generate rental income a lot of different ways these days. You’ll probably be driving a lot less in retirement. Maybe you only need one car most of the time. You can rent out a car on Turo. Maybe you’ll be going on vacation more often and for longer. You can rent out your home on Airbnb while you’re on vacation. Maybe you have some great period furniture that you’ve held onto throughout the years. You can rent it to staging companies (for home sales) or rent it as set dressing. You can rent just about anything you own these days and generate some income. 5. Part-time employment or a passion project You may surprise yourself and find you have a job in your retirement. A lot of retirees take on part-time employment in a low-stress environment. Not only does it provide a nice source of income, it can fill the days with meaning and activity. Others pursue a passion project in retirement. And after a few years, they start generating meaningful income from that project. Working in retirement can provide health and financial benefits, but be sure you understand how working in retirement will impact the rest of your finances and your overall retirement plans as well. Supplement your retirement If you think you might have to cut something from your retirement budget, be sure to review the above list for opportunities to supplement your income. Social Security and investments may only take you so far, so be sure to take advantage of any other resources you have at your disposal to achieve the best retirement for you. By Adam Levy– Sep 4, 2023
Reverse mortgage requirements
Key takeaways Reverse mortgages are a way for older Americans to access the equity in their homes and use it to fund retirement while still allowing them to live in the home. Such a mortgage pays the homeowner each month out of the home’s equity rather than the homeowner paying money to the lender. However, reverse mortgages can be complex, and there are strict rules and guidelines dictating who qualifies for these mortgages. These rules also dictate how much income a reverse mortgage can provide and how much they cost. It’s important to understand reverse mortgage requirements and rules if you’re considering this financial option. Reverse mortgage requirements There are a variety of requirements and eligibility guidelines to meet to qualify for a reverse mortgage. Reverse mortgage age limit First and foremost, the homeowner must be 62 or older. This is true for government-sponsored home equity conversion mortgages (HECM) and most private reverse mortgages. However, a small number of lenders may offer options for people as young as 55. Other reverse mortgage qualifications Beyond the age requirements, for reverse mortgages, you must meet the following additional requirements. The home you’re seeking a reverse mortgage on must be your primary residence. That means it must be the address where you spend most of the calendar year. Other reverse mortgage requirements are that your house must be in good shape, and you must participate in counseling that’s provided by a HUD-approved reverse mortgage counseling agency. During the counseling session, an agent will review your eligibility for a reverse mortgage and also discuss the financial ramifications. For instance, those who take out a reverse mortgage loan when they’re too young risk running out of money later in life, during a time when it’s likely income will be lower and healthcare bills may be steeper. Alternatives to reverse mortgages for those that don’t qualify If you’re looking to turn your home equity into funds but can’t qualify for a reverse mortgage due to age or other restrictions, consider some of the following options: Reverse mortgage requirement FAQs Mia Taylor Fri, September 1, 2023