Do you hate your Adjustable Interest Rate?
A Client called me this week, frustrated by his adjustable interest rate. We talked at length when he set
up the loan about the pros and cons of doing his loan with an adjustable rate but neither of us thought
interest rates would get as high as they are now.
I understand his frustration but we also talked about the opportunity he was missing.
Growth Line of Credit
With a Reverse Mortgage if you have an adjustable interest rate you also have a growth line of credit.
This means that any money you have available to draw from the mortgage is growing by the interest
rate you have on the mortgage.
Example
Let’s say you set up your Reverse mortgage. We pay off your existing mortgage but you still have
$100,000 of available funds left over. But you don’t need this money right now. The best thing to do is to
leave that money in your mortgage because if you have an interest rate of 7.5% that $100,000 will grow
to $107,500 your first year and will keep growing until you do need to draw that money back out.
What my other clients do
I have clients who recognize the power of this feature. They may have a 3-year CD at the bank paying
3%-4%. Or maybe they have a money market paying 4.5%, or heaven forbid they have money in their
savings account earning .5%.
When they realize that if they took that money out of those accounts and put it on their mortgage they
have two primary benefits:
- They have paid down the balance of their mortgage and are now being charged less interest n
their loan. - They’ve added that money to their line of Credit and that money is growing at the 7.5% they
have on their mortgage.
And it’s non-Taxable!!!
Home Equity is non taxable so when these clients do go to pull money back out of their home equity the
government cannot tax any of it.
If you need a better place to store your money, you might consider a Reverse Mortgage. You can use
that money to pay down your mortgage balance but still have full access to draw it back out when you
need it.
If you have more questions about this or any other feature of the Reverse Mortgage just give me a call.
Trevor Carlson
President – Equity Conversion Specialist
Heritage Reverse Mortgage
435-359-9000
trevor@heritagehl.com
Heritage NMLS #1497455 Trevor’s NMLS #267962
1060 South Main Street Bldg. A Suite 101B
St George Utah 84770