Four Ways to Keep Your Relatives From Handing Out Free Chili Samples at Costco.

Comments(0) By Mike Miller •April 29th, 2008

I like to shop at the Danville Costco but I can’t help but feel compassion for the workers scattered around the warehouse handing out product samples. I get the feeling that most of them never thought they would spend their latter years standing on a cold cement floor in a 100,000 square foot building working at near minimum wage, handing out free bite size samples of chili. I mean, I am sure it IS someone’s dream for retirement, but probably not the ones that I’ve met. So I have come up with my list of the FOUR best options for senior homeowners who want to stay in their home as long possible.

1. Reverse mortgages. Most of these loans are backed by the government (FHA Administration) and provide a truly good option for many seniors. Certain restrictions apply, but if you meet the criteria, it is a great way to receive additional monthly income without the added worry of debt payments for as long as you live in your home. It is almost like turning the home equity that has built up in the home into money in the bank! Counseling is a major part of the process, and it is done by a completely independent party to ensure that the senior us really aware of the risks and benefits.

2. Rex and Co. This is a very interesting product that allows homeowners to trade a percentage of their future equity for a lump sum amount NOW. There are no age limitations, but because it is a complex transaction, a borrower should always seek out qualified, independent, legal and tax advice so see if this option is right for them.

3. Equity Key. Another program that allows a person to get money NOW in exchange for future equity growth, but with a twist. Due to age restrictions and the requirement that the borrower be insurable, this is harder to get than most regular mortgages. In fact, the company takes out a life insurance policy on the borrower and then sells it to an unrelated party in two years for a big payday. If getting payment free money NOW is important, this option can be used. EquityKey allows you to convert the future equity in your home into debt-free cash today.

In exchange for the debt-free cash, you will give EquityKey the right to a portion of the future appreciation of your home. EquityKey is NOT a loan and it’s NOT a debt. They only make money if your home appreciates.

EquityKey is a bank and they pay you money to partner with you only on the future appreciation of your home. Think of it like getting an advance on the future sale of your home.

You get paid today, and when you experience any future appreciation, you’ll split that with EquityKey. So, EquityKey will only make their investment back when your home appreciates. No appreciation, nothing to payback. Small appreciation, small payback. This appreciation (if any) is determined when you sell the house or pass away.

All of the equity that you’ve already accumulated, stays with you.

Remember, EquityKey only splits the future appreciation, not your current appreciation, that part belongs to you.

4. Home Equity Line Of Credit (HELOC). Another way to tap into your home equity and these can work well in shorter term scenarios, but the fact that a person must qualify for the loan, and then make repayments, makes this one of my least favorite options for seniors.

If we assume that the relatively small income from continued work REALLY does make a difference to a senior, and allows them continue to live comfortably in their current home, then any of those options can make a serious impact in their lives. It may even allow them to fully enjoy their twilight years. I can think of nothing that is of more importance that keeping my parents comfortable, and in their home as long as possible.

Keep in mind that no strategy should be utilized until all options are considered, and all concerned parties (heirs?), allowed to review what is truly in the best interest for their family members. For more information about any of these options, please contact my office today!

No related posts.

Filed Under: Borrower Tips