Michael Bock

Mortgage Loan Originator

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How A Reverse Mortgage Can Help With Long-Term Care

January 16, 2020 by Michael Bock

How A Reverse Mortgage Can Help With Long-Term CareAnyone who has paid attention to the TV recently has likely seen a lot of commercials for something called a reverse mortgage. For those who might not know, a reverse mortgage is exactly that. In this option, people receive monthly payments from a lender in exchange for equity in their homes. In essence, this functions as an annuity.

One of the major benefits of a reverse mortgage is that it can be used to cover the costs associated with long-term care. Over the next few decades, the number of elderly individuals in the United States is projected to double. For this reason, long-term care is projected to become a major expense.

How Can A Reverse Mortgage Pay For Long-Term Care?

Long-term care is one of the biggest unexpected expenses encountered by the elderly. Often, coinsurance associated with a health insurance policy, combined with the lifetime caps on many policies, can shift significant medical costs to the individual. This leaves many elderly individuals looking for an immediate for some cash. Because many elderly individuals and families are on a fixed income, there are not a lot of options. 

This is where a reverse mortgage can come in handy. Many elderly individuals have paid off their houses entirely. This can act as an immediate source of equity, providing seniors with a much-needed cash infusion to cover the costs associated with long-term care.

Improving On Reverse Mortgages And Long-Term Care

With long-term care expected to become a bigger issue as a larger percentage of the US population reaches retirement, suggestions have been offered to address these costs. One of these suggestions has been to marry long-term care and reverse mortgages with improved social services.

Many experts have been suggesting ways to tie the equity in someone’s home to Medicare and Social Security. This could be used to create a nice safety net that might support seniors by covering the costs of long-term care. Given the stress that an unexpected medical expense can create, this can offer a much-needed respite for seniors and caregivers alike.

Taking Advantage Of A Reverse Mortgage

In the meantime, it is important for seniors to note that a reverse mortgage can offer an immediate cash infusion. This can be used to cover an unexpected cost, such as a medical bill. It will be interesting to see how reverse mortgages evolve in the future.

Call your trusted home financing professional with questions about a reverse mortgage or other options that are available in your situation.

Mortgage Tagged: Equity, Financing Options, Mortgage

3 Positive Reasons To Get A 15-Year Mortgage

November 6, 2019 by Michael Bock

3 Positive Reasons To Get A 15-Year MortgageMost people can’t pay for a home outright, so they finance it with a mortgage loan. 30-year mortgages are more conventional, but they also come with a significant interest price tag.

People who have a stable career and the income to afford larger payments, or who are nearing retirement, may want to take out a 15-year mortgage. Here are some reasons to consider one.

Save Money Over The Life Of The Loan

The total interest paid on a 30-year loan can be nearly as much as the principal. While it can be difficult to see the bigger picture when facing a mortgage payment that will be a good bit higher, consider this: Paying off a loan in 15 years versus 30 years will save tens of thousands of dollars in interest, and in some cases, as much as $100,000.

Interest rates on 15-year mortgages are also typically lower than other longer-term home loans, which provides additional mortgage interest savings.

Build Equity Faster

Equity refers to how much of your home you’ve already paid for plus what it appreciates in additional value over time. If your home is worth $250,000 and you owe $190,000 on your loan, you have $60,000 in equity.

Since more money is going toward the loan principal rather than interest on a 15-year loan, you build equity faster, which is beneficial for numerous reasons. It lowers your loan-to-value ratio and may improve your chances of getting a home equity loan, which can be used for large expenses.

Become Mortgage-Free Sooner

Instead of having a housing payment later in life, that money is freed up for retirement or other expenses. 

If retirement is on the horizon for you in the next 10-20 years, ditching your mortgage payment sooner rather than later is wise. Once you are on a limited income, you will want as few expenses as possible. Plus, having the option of a home equity loan for emergencies is attractive.

There are several excellent reasons to get a 15-year mortgage. Run the numbers with your trusted home mortgage advisor and decide what makes the most sense for you.

Mortgage Tagged: Equity, Mortgage, Savings

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