By Alain Valles
If you are like most people your two largest retirement assets are your investment savings and your home. However, due to its illiquidity, the home is seldom part of the retirement planning conversation. It has simply been too hard to turn home equity into ready cash.
Insightful financial advisors and their clients are including home equity as part of goals-based retirement planning thanks to a new financial product called the R-LOC™ (Retirement Line of Credit), which provides access to this critical asset to help ensure long-term retirement success.
The R-LOC is an advanced, yet simple planning strategy that can solve the retirement quandary of balancing future quality of life desires and needed cash flow requirements, while offering protection against the uncertainties of inevitable life events. One of the greatest advantages of an R-LOC is it does not detract from an existing retirement plan. On the contrary, an R-LOC complements and strengthens your current strategies and provides the opportunity to better fund your plan.
The R-LOC capitalizes on the features of the improved federally insured Home Equity Conversion Mortgage (HECM), also known as a reverse mortgage. Past reverse mortgage programs had high costs and other negative features. The new HECM program has drastically reduced costs by over 40 percent in most situations, while affording homeowners increased benefits and protection.
As a result, the retirement financial planning conversation has changed. The R-LOC is intended for a wider range of people who desire to optimize their current retirement plans without changing their lifestyle and standard of living.
An R-LOC allows a homeowner 62 years old or older to have access to a percentage of their home’s equity for use today or for a rainy day. In essence, an R-LOC provides a new source of tax-free cash if desired, or as it is needed. The cash can be received as a lump sum, a monthly check for life, and/or as a line of credit that may be accessed at a later date. All this without giving up control and, most importantly, providing the option to never again make a monthly mortgage or home equity loan payment.
R-LOC features include:
•Access to tax free cash when needed;
•Line of credit that grows over time regardless of home value;
•No required monthly mortgage payments;
•Pays off current mortgage and other debts;
•Supplements your Social Security; and
•May close in a trust or life estate.
Invest a few moments to learn how an R-LOC can improve your ability for a successful retirement plan at www.retirementloc.com.
Alain Valles is President of Direct Finance Corp. with over 25 years of experience. He has a Masters in Real Estate from M.I.T., an MBA from The Wharton School and achieved the Certified Senior Advisor designation. He can be reached at 781-724-6221 or by email at av@dfcmortgage.com. Read additional informational articles on www.fiftyplusadvocate.com.
