Investor · Warner Robins, GA · Member since 2015 · 1k+ posts · 490 votes
The person I know is 76, he has $300k of equity in his property and wants to stop working.
My thought process is if he gets a reverse mortgage lump sum, he can invest that money into cash flowing multifamily, and can live off of the cash flow and when he dies the investment can be used/sold to pay off the reverse mortgage.
What are your thoughts on this? I'm searching for the best way to utilize his equity so he can stop working.
Lender · Alpharetta, GA · Member since 2021 · 34 posts · 36 votes
4y
Hey Rosston,
The problem I see on reverse mortgage is that the interest rates are higher than most other types of mortgages. The equity he holds in his home will go down as he accumulate interest on his loan. With todays rate, the equity will go down quick. Another option for that is to do a HELOC and use the money to buy 2-4 unit property. He can move to one of the unit and rent the others. He would also rent his primary home, and that would take care of the mortgage. That way he would have multiple source of income. Whenever he dies, the executor of his state wont need to sell the primary house to pay off the reverse mortgage lender.
Real Estate Agent · Boise, ID · Member since 2016 · 1k+ posts · 888 votes
4y
@Rosston Smith I am with @Vinnie Da silva go with a HELOC. But for what ever he buys it doesn't matter but HELOC are a bit more simple. However at that age would he be better off selling and just renting so that he has no maintenance to worry about? Or would selling leave him with too little to continue the life style?
@Rosston Smith I am with @Vinnie Da silva go with a HELOC. But for what ever he buys it doesn't matter but HELOC are a bit more simple. However at that age would he be better off selling and just renting so that he has no maintenance to worry about? Or would selling leave him with too little to continue the life style?
The issue is I doubt he has the income to qualify for the equity he has locked away in his home. Also, its his primary home and he wouldn't be interested in selling. This is why I was considering the reverse mortgage route.