This past October saw 30-year-fixed-mortgage rates dip below four percent for the first time in history. Yes, you read that right – the first time in recorded history! For seniors approaching or in retirement, this fact has profound implications and creates significant opportunities to consider.

If you own property that either has, or could have a mortgage, and are currently retired or approaching retirement, there are three scenarios you should be thinking about: Refinancing, cashing out equity, or looking into a reverse mortgage.

Refinance…Now!

If you currently have a mortgage on your house, you should be talking with a mortgage broker or bank to see about a refinance. Everyone needs to at least make the call and see if they have an option to refinance. While rates change daily and may even have jumped by the time this article is published, I can’t stress enough that you need to look into this immediately.

Take Cash Out

This is a slightly more involved conversation, but can be summarized simply: If you can borrow cash out of your home at the lowest interest rates in history, you should seriously consider it. I know that’s a statement you probably think is crazy the first time you hear it, however, the benefits are dramatic and I’m seeing many folks in retirement experience huge benefits from doing this.

As an example, I recently met with a 70-year-old woman whose house is worth around $400,000, with a mortgage below $50,000. By refinancing to a $200,000 mortgage, she will now be receiving between $571 and $908 of extra income a month, every month, for the rest of her life. The $571 is the minimum income and can literally be guaranteed. While I’m not going to mention every detail for the sake of space, this includes all the factors such as a higher mortgage payment, taxes and guarantees.

Virtually anyone who has equity in their house and is able to qualify for a mortgage can implement this exact same strategy. It can literally be done in a risk-free and guaranteed or insured way. It’s not magic, just a result of the lowest interest rates in history.

Consider a Reverse Mortgage

The third option, taking out a reverse mortgage, is essentially a consolidated version of the second option. The reverse mortgage puts a refinance together with lifetime income in one simple package.

I am well aware that many have a negative impression of reverse mortgages. Since my firm does not offer reverse mortgages, I have nothing to gain, and I can tell you without hesitation, that fears over reverse mortgages are unfounded. Years ago, when reverse mortgages were created, they were not an option I would ever consider or recommend. There were significant problems and risks. That has all changed. Today, those problems have been addressed and the risks removed.

In the same example I used above, if she took a reverse mortgage, the 70-year-old woman would receive an additional $1,216 a month in income, every month, for the rest of her life. Again this is safe, insured and guaranteed. The house can never be lost or taken as long as she lives there.

Is there a downside to a reverse mortgage? Only this: Your heirs will eventually inherit a house with a mortgage on it, possibly even a large mortgage. The refinance with cash out (see second option) generally gives you more income and leaves plenty to your heirs. The reverse mortgage generally gives you the most income, but may leave less to your heirs.

Over the past fourteen years, I’ve met only one person who said they wanted to sacrifice their own lifestyle for the sole purpose of leaving a larger estate to their kids. If that is your goal, fine, then a refinance, cash out or a reverse mortgage would not be for you.

Feel free to contact our office and ask for our Home Equity Income Assessment. We can send you this personal analysis showing how much additional income you could have. During the month of November, we are waiving the fee for all “Life After 50” readers so simply call or e-mail our office.

William Jordan is a nationally recognized wealth manager and well-known speaker on financial and investment topics. To ask a question or request a meeting for a financial second opinion, contact his office at (949) 380-8600 or online at www.WilliamJordanAssociates.com.