Thursday, October 4, 2007

Jumbo Reverse Mortgages

Jumbo Reverse Mortgages

Increase your income without eroding your savings!
Are you living the retirement you planned for?
• Even if you saved and invested diligently,
today’s low interest rates along with higher
prices for life’s “necessities” can be robbing
you of your golden years!
• A typical “CD” will pay you 2.5 percent –
and then you have to pay taxes on it!

Have you considered…

• You may have found that in order to
survive on a “minimum cash income”
you may have had to tap the principal
of your hard-earned savings or even live
well below the standards of living you
had planned for!
• There is a program available that will
provide you with “tax-free income”
without touching the principle or
interest earned on your savings!

What if I have $500,000?
Even if you have saved half a million dollars,
that still doesn’t get you far today!

What does a “typical” budget look like?
Savings: $500,000
CD Interest: $12,500
Social Security: $20,000

Total Income: $35,000

Taxes: $5,000
Home Maintenance: $5,000
Property Taxes: $5,000
Medical Expenses: $10,000
Utilities: $3,500
Car Maintenance/
Upkeep/Insurance: $4000
Food: $7,000

Total Expenses: $39,500
Net yearly cash flow – MINUS $7,000

Even if you are “just getting by” you are
eroding your savings!

What Does a Gallon of Gas Cost?
What About a Pound of Lean Hamburger?
What About a Pound of Lean Hamburger?

$2.50 $5.00

$ .50
$ 0

$ 5,000
$ 0

Ten Years Today

A New Car?

Ten Years Today

$ 0

$ 8.00
$ 6.00
$ 4.00
$ 2.00
$ 0

Ten Years Today

A Movie Ticket?

Ten Years Today

What does
all this mean?

• Even if you have saved a substantial
amount of money, the ravages of inflation
coupled with today’s low interest rates
are “eating away” the safety margin you
need to provide security in your “Golden
• However, real estate generally rises in
price faster than inflation, so living off of
the equity in your home rather than the
savings can help you beat inflation!

A Reverse Mortgage
Can Help!

• A Reverse Mortgage can help provide the
safety margin you need to live comfortably
without eroding your hard-earned savings!
• The value of your home rises “tax-free”, in
contrast to CD or bond interest which you
have to pay taxes on.
• On average, a home increases in value at
4.6% annually.

CD’s vs.
Home Equity

$500,000 $500,000
CD Home Equity
Average Yield: 2.5% 4.3%
Annual Income: $12,500 $21,500
Taxes: $3,500 $0
“After Tax” Income: $9,000 $21,500
“After Tax Yield”: 1.8% 4.3%

When taking tax effects into account, using home equity growth
to finance retirement results in a 140% increase in yield!

*assumes 28% total taxation including State & Federal taxes

What’s The Difference?

This example assumes $500,000 in savings and a $750,000 home. Living off savings, withdrawing $30,000
annually in today’s dollars, you will have depleted your savings by almost $275,000 in ten years.

However, if you finance retirement through the cash account, your home equity will have dwindled by less
than $50,0000 during the same period, assuming average home appreciation.*

*This example assumes 2.75% return on savings, 3% inflation, 4.6% home appreciation, and a 6% interest rate on cash account loans. It also assumes a
28% tax bracket (state, local and federal taxes)

How Can I Use the Proceeds From My Reverse Mortgage?

Any Way You Want – Including:

• Making home improvements
• Day-to-day living expenses
• Helping provide for grandchildren’s education
• Taking a long-needed vacation
• Purchasing a long-term-care insurance policy to
protect yourself and your family
• Paying off an existing mortgage or credit card debt

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