Seniors Considering Reverse Mortgages to Help Tide Over Investment Income Declines
Millions of Americans are paying a high price trying to find a safe place to deposit their moneys as banks offer very low interest rates on savings accounts and CDs (certificates of deposit).
The senior citizens and others on fixed incomes have been hard hit and many people are seeing their returns on savings, C.D.’s and bonds dwindling so much that it’s costing them money once inflation, taxes and fees are considered.
Joe Parks, a retired accountant in Houston working for an organization that works to help people in investing decisions, said that the general downturn in the American economy has an impact severe enough to cause a half to three-quarters of a percent cut in the senior income derived via maturing C.D.’s.
People who rely on such investment incomes for financial support are being forced these days to consider new and different options.
Peter Strauss, an attorney who advises seniors, said that if your assets are not appreciating or producing any sufficient income, it is better to start considering a reverse mortgage as a ways and means of making a huge asset produce income on your behalf for your benefit.
Recently, interest on one-and-two year treasury notes was also down to just 0.89 percent and 0.40 percent. Companies and financial institutions such as Bank of America, Citibank and Wells Fargo offer negligible rates of interest on standard money market accounts and basic savings accounts.
The average citizen finds some financial stuff difficult to understand. A significant part of the federal government’s plan of repairing the economy is to pay savers nothing. If you see the line ‘yield on cash’ and it shows rates like 0.01 percent then that means it is going to take thousands of years to double a money investment.
People like Eileen Lurie decided to obtain a reverse mortgage to help offset the decline in returns from investments tied to interest rates. Lurie took a reverse mortgage from a bank and she said the bank was going out of its way to explain the product to her.
These reverse mortgages are made available for seniors aged 62 and above. They can convert their home equity into cash. The money thus obtained via a reverse mortgage is considered tax-free for all purposes and intents. There is no impact on Social Security or Medicare incomes and payments. The reverse mortgage loans do not need to be repaid during the life time of the senior as long as the senior continues to live in the same house or property.
Financial Returns through certificates of deposit have dropped to between 1 percent and 2 percent. About a year or so ago, these C.D.’s were producing 5 percent returns. Seniors are also reluctant to redeploy money into high-risk ventures and high-risk investments. They need easy access to cash to meet basic and foreseeable expenses.
The interest rates for Treasury securities and bank products are also very low and negligible. They are not anywhere close to the levels before the financial recession. During these times of financial hardship, seniors can turn to a HUD reverse mortgage to help themselves with more cash inflow as a way of earning from their home equity while continuing to enjoy possession of the same property or home.
