Here is an interesting topic as I fit the category myself. Hopefully once you have made it to the ripe old age of 50 you still have good health and are financially grounded. Financially grounded means that you have taken the proper steps for saving for retirement that is looming, in the not too distant future. This also includes college for you kids and any future weddings or large expenses that are to be incurred. You may not be rich by any stretch, but you have done what it takes for your family to be secure. It is time to protect your assets.
So, lets take a look at your home, it may only be the one piece of real estate you have ever owned and you have paid it down substantially over the years. Now you hear the commercials advertising using your equity for things like college and weddings and large family expenses. Is this prudent or a play from mortgage companies to sell you additional financing? Having been in the Mortgage Business for the last 35 years I can tell you it is a play for your business. However, if you need the money and it is the only way then you do have it at your disposal. My advice would be, even though I am in the business of selling you that loan, is to really evaluate your finances and see if there are other ways to get the funds you need. I say this as you home is your family’s shelter the place where your kids grew up and to put additional financing on it may put it in jeopardy.
How could financing a home when I am over 50 jeopardize my home, I have a good job? This is a good question and can be answered by those that have come before you. 50 doesn’t mean that you are not capable of working or staring at your death bed what it does mean is that you no longer will have the energy to keep up with 20 and 30 somethings in the work force. Large employers have traditionally let go people over 50 to make room for the younger more energetic workers. I am not saying this will happen to you but to guard what you have attained in life is important. If something like a loss of a job or an illness were to happen it is a lot harder to find a new job so protecting your assets is super important, even more so when you are over 50.
In addition, if you have been in the private work force your entire career you may not have built the retirement that you may need to have when it comes time to retirement. Your home can be used to assist in retirement if the is the case. When you are over 62 and have equity in your home you can utilize a reverse mortgage to use the equity for additional income or erase your monthly mortgage payment so the income you do have doesn’t need to go to a mortgage payment. You can’t get a reverse mortgage unless you have enough equity (generally you would need about 30-50% equity depending on your age). So, if you mortgage your house to pay for stuff in your 50’s you may not have enough equity to get a reverse mortgage in the future. Another reason why you need to evaluate your finances when getting any financing when you are over 50.
Reaching the age of 50 and being financially stable is a great accomplishment and you don’t want to jeopardize your finances at this age. When evaluating your mortgage when you are over 50 and you have windfall like an inheritance or an insurance claim you may want to consider paying down your mortgage. This I have done for my clients a lot lately and it is a financially smart move. As an example; a 54 year old receives an inheritance and she owes $300,000 on her current home loan with 20 years left to go. She gets an inheritance of $400,000 and she already is financially stable with a good paying job. She may elect to pay off the existing loan, or pay it down, or refinance the existing loan to a lower balance and lower payment with a lower term of the loan. This would be a financially prudent thing to do as she would save tens of thousands of dollars in interest and have a lower payment to allow her to save even more monthly.
Being over 50 and financing stuff should be done with care to make sure you are not risking your home and your assets. Here at MAE Capital Mortgage we can do all the numbers for you and help with the planning of your future. If you are looking for a Reverse Mortgage, we also provide those to our clients and deliver the most aggressive programs available on the market today. As with any financial moves you make you should also consult your Tax consultant or Financial planner to make sure you are making the right decisions with your finances. We are here to help so if you have questions or please give us a call at 916-672-6130.