While stock market growth has worked in your favor these past two years since you retired, you are feeling far less secure going forward. You’ve been exploring possibilities for refinancing your home as a way to feel more secure about your own financial future.Widowed more than a decade ago, you are not planning to remarry, but you are very actively involved in cultural activities with friends, intending to make every effort to remain in your neighborhood. You’ve kept the house maintained and both indoor and outdoor décor updated, and hope to be able to live at home for decades to come.

A recent seminar you attended with a female friend dealt with ways to “utilize housing wealth” in retirement. Your friend liked the idea of having an equity line of credit, and, frankly having a source of extra cash sounds appealing for you as well, given the chance that the market value of your investments (as some pundits would have it) might take a “hit” in the not-so-distant future. At the same time, you understand that the equity in your home is a finite resource, and when you reach the limit of that equity line of credit, the money flow could come to an abrupt end.

Some clarification might be needed here. True, if you were to take a reverse mortgage structured as a line of credit, once the entire benefit is used up, no further draws will be permitted. At that point, you would have the choice of refinancing to take advantage of any appreciation in value that has taken place. The other important advantage is that, whatever portion of your credit line is not used will keep growing, increasing at the same rate as the interest being charged on the borrowed portion of the line.

A second approach is to take the reverse mortgage benefit in the form of a lifetime tenure payment, which continues for as long as you reside in your home, regardless of how long that is. Just as, in academic institutions, permanent employment status is granted to individuals after a probationary period, a tenure reverse mortgage payout is :”permanent” for as long as you occupy the home.

https://mutualreverse.com/david-garrison

David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.orgEqual Housing Lender

When Sinatra crooned “Love is lovelier the second time around”, you’re pretty sure he wasn’t referring to a home mortgage refinance. In fact, in the years leading up to your retirement from full-time employment (six years ago now, with your wife having retired a year prior to that), year earlier), your focus had been on “retiring” your home mortgage. 

Post-retirement, having decided against following some friends into retirement community living and in favor of “aging in place”, you took out a reverse mortgage, using a portion of the equity line to restructure the home’s interior to improve navigability and safety. Other than those expenditures, you’ve not found the need to make withdrawals from your Line of Credit since then. Meanwhile, not only have you enjoyed “staying home”, you’ve noticed that real estate values in your neighborhood have continued to escalate. Although your own decision to stay put has not changed, you would like to find a way to take advantage of the increase in value of your home and are wondering whether refinancing the reverse mortgage loan is a viable move. 

An appreciation in home values in your area is certainly reason enough to at least consider a HECM-to-HECM refinance. A new appraisal (sometimes the lender might require using the lower of two appraisals) would be needed, with the possible result being a significant increase in the Line of Credit available for your use (tax-free*) for years to come. 

As you know, all reverse mortgages are non-recourse loans, meaning that, so long as you continue to occupy the home and keep up with the maintenance and insurance costs, no monthly mortgage payments** will ever be required. With no monthly mortgage payments** due, you will never be “upside down”; neither you nor your heirs will ever owe an amount greater than the value of the home itself. 

 It will be reassuring to have a larger line of credit as, on the one hand, a “buffer” against future inflated medical and daily living costs, and, on the other hand, a source to tap for travel and other luxuries.

Just as Sinatra used to croon, referring to love, you may well find that a reverse mortgage is lovelier the second time around!

https://mutualreverse.com/david-garrison

*Please consult a tax advisor. **Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.orgEqual Housing Lender

While in general, you’re confident that you’ve planned well for retirement, you are concerned about the increasingly obvious rise in everyday costs of living. The two of you have always shared investment decisions, taking a conservative approach, continuing your pre-retirement 60% stock/40% fixed income model. With zero revolving debt except for a car loan, you’re just around six months shy of paying off the mortgage on your home (where you’ve decided to spend your retirement years). Just months shy of completing your first full year of retirement, you are now both receiving regular Social Security checks. Combined with pension income and very modest systematic withdrawals from retirement accounts, you’ve been able to cover lifestyle needs and maintain your “hybrid” life/long term care insurance policy. 

Taking a realistic view of your portfolio choices going forward, your instincts tell you to skew more heavily towards fixed income, reducing the chance of big drops in the stock market. At the same time, you’re afraid to become more “conservative” at a time when your costs of living are undeniably rising. You’ve been reading predictions from different “gurus” and are in a quandary about which would be the next best steps to take. 

One asset you’ve apparently overlooked in the planning is the equity built up in your home. (Given the rise in real estate values, that equity has probably grown substantially.) A reverse mortgage might become an element in your long term “portfolio planning”, with the un-borrowed portion of your housing wealth used as a surrogate for the “fixed income” part of your asset allocation strategy. The growth earned on the un-borrowed portion of a Home Equity Conversion Mortgage line of credit would be a “surrogate” for the “fixed dollar” portion of your portfolio, because the unborrowed portion of your credit line will grow at the same rate as that being charged on the loan itself.  

While the reverse mortgage itself is a form of debt, it’s reassuring to know that it is a non-recourse loan. With no monthly mortgage payments* due, you will never be “upside down”: neither you nor your heirs will ever owe an amount greater than the value of the home itself. Once the reverse mortgage financing has been set in place, you might feel comfortable increasing the allocation to stocks in your investment accounts, in turn increasing your chances of keeping up with rising living costs.

https://mutualreverse.com/david-garrison

*Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.orgEqual Housing Lender

Your neighbor (like yourself in her late seventies) recently confided that she is in the process of what her dentist is calling a “rebuild” of her mouth. The six-nine-month long series of procedures, including extractions, surgeries, and dental implants, will improve not only her appearance, but enable her to enjoy eating again. Seeing this friend’s self-confidence so visibly improved, you decided to have her dentist do an assessment of your own mouth and propose a treatment plan. When you reported that you’d left the encounter excited by the possibilities but horrified were horrified by the cost, your neighbor confided that she was using reverse mortgage withdrawals out of the equity in her home to fund her dental work.  

While you like the idea of having a ready source of funds, not only to rebuild your own mouth, but to cover any other large medical costs that might arise in later years. Your home has been mortgage-free for a decade and you know it has appreciated considerably in value. Your biggest hesitation in moving forward comes from the fact that you’ve taken pride in having worked hard to become – and stay – debt free. Although neither of your children is in need of – or expecting – financial help from you, the thought of taking on a new, hefty debt obligation is daunting. 

A reverse mortgage is about converting an otherwise illiquid asset (it sounds as if it also your largest) into one that addresses a need – or at least a significant improvement in well-being. The potential dental “rebuild” aside, ask yourself – what alternatives are available to you to help defray future medical and dental bills? To what extent would those costs be covered by insurance, including Medicare, supplemental health insurance, and Long-Term Care insurance? 

Of course, your friend’s situation may well be different from your own. Is it her intent to “age in place” in her home?  Is that your intent for your own home? 

Yes, a reverse mortgage is definitely a debt, and all debt needs to be carefully considered – and carefully managed. It’s reassuring to know that Home Equity Conversion Mortgages (or HECMs), unlike other forms of debt, are non-recourse loans, which means you will never be “upside down”, owing an amount greater than the value of the home itself.  With a reverse mortgage set up as a “line of credit”, you can make tax-free* withdrawals. Whatever portion of your home equity that has not been withdrawn, meanwhile, will be credited with interest at the same rate as that being charged on the outstanding loan balance.  And, so long as taxes and insurance are paid, you may remain in your home as long as you wish.

When, almost forty years ago, reverse mortgages were created, it was specifically to allow older Americans like yourself a way to meet and manage current and future financial contingencies.

Remember the line, “Smile, you’re on Candid Camera”? As is true for your neighbor, your line might be “Candidly, a reverse mortgage can help fund your new smile!”

https://mutualreverse.com/david-garrison

*Please consult a tax advisor. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.orgEqual Housing Lender

Your plan had been to work at least until your so-called Social Security “normal retirement age” of 67, but here you are, barely 62, victim of a pandemic-based downsizing. You have been applying for jobs and will certainly find a way to earn some money, but there is little prospect of continuing your former standard of living. You’ve considered taking early Social Security to avoid the cash crunch, but learned, much to your horror, that the reduction in your monthly benefit would be in the four figure range!

You do have a 401k plan, but it was impacted in the course of the divorce (in order to keep the home, which has only a modest mortgage balance remaining, you needed to reduce your share of other assets). In any event, you’ve learned, now that you’re no longer part of the company, you cannot tap the 401k through a loan; any withdrawal would be fully taxable. There could possibly be an inheritance in your future, but you can’t rely on that and need to find ways to bridge the financial gaps now. Although your credit record is good, without being able to demonstrate a reliable current income source, you’re not sure you’d qualify for a second mortgage or home equity line of credit.

In order to bridge the financial gap between now and Normal Retirement Age, consider using the equity in your home as the stopgap funding source. In a government-insured reverse mortgage line of credit, the equity in your home will serve as the loan collateral. Not only will there be no obligation for you to make regular monthly mortgage payments,* but you can begin taking “draws” to supplement your income. 

Over the course of the coming five years, depending on your success in finding part time or full time work, you can decide at any point to stop making withdrawals and even to begin optional repayments. So long as you keep up with property taxes, insurance, and regular maintenance of the home, you will not ever be obligated to make monthly mortgage payments.* Meanwhile, your 401K balance can continue to grow tax-deferred, while your Social Security benefit is “growinng” to its “normal retirement” size.

https://mutualreverse.com/david-garrison

*Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.orgEqual Housing Lender

“As advisors, we’re often programmed to believe we are fiduciaries of the capital clients give us,” Tai-Chim Tung observes in Advisorpedia. “That’s certainly true,” she says, “but a big part of being an advisor is the actual business of advice..”.

As a financial professional, one uncomfortable aspect of this “actual business of advice” is that, while you’re often asked, nowadays, about reverse mortgages, (representing a “product” not offered by your broker-dealer or parent company). Even as your own reading and study are describing the use of housing wealth as a “critical tool for retirees looking to protect their lifestyle and legacy,” you’re fearful of discussing reverse mortgages with your clients.  

After all, you’re thinking, as the principal financial advisor for many of your clients, you are the one who has the most detailed understanding of their past and current financial situation, their investment profile, housing intentions, and their general health situation. If anyone is in a position to address their questions about financial options, it’s you. You’re dedicated to “prioritizing the best interests of each client (FINRA’s Suitability Rule and SEC’s Regulation Best Interest), and would not like to steer clients away from options that might prove appropriate for them. At the same time, you’ve no desire to violate the policies of your broker-dealer.

While you certainly must proceed cautiously when talking with clients about the products and services outside the purview of your broker-dealer, the topic of government-insured reverse mortgages belongs on your need-to-know list. Careful not to either recommend or “critique” reverse mortgage financing, (and explaining that this is outside your area of expertise), you  might suggest to certain clients that they seek the advice of a reverse mortgage specialist.  

https://mutualreverse.com/david-garrison

Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).

David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.org Equal Housing Lender

You feel at once blessed and proud, because in taking stock of your lives since retirement, the two of you have succeeded, through your own endeavors, in building assets you inherited from parents and grandparents into a nice, if not newsworthy, estate. 

You live on a property that’s been in the family for generations, now updated and remodeled, where you’re hoping to spend the rest of your days. With no children of your own, you have funded college costs for several nieces and nephews. However, you have agreed that, in your estate, you will not leave assets to individual beneficiaries; your plan stipulates that, upon the second of your deaths, the primary beneficiaries will be three different charitable organizations (one of those will inherit the property itself.)

Although the current value of your joint estate is in the low seven-figure category, you are far from needing to be concerned about estate taxes. More important to you is keeping control of your financial assets in order to maintain your own (not overly lavish) lifestyle and being assured of adequate “rainy day” money for even the most extreme of healthcare needs throughout both your lifetimes. 

You appear to have given very careful thought to the way in which you hope to share whatever wealth remains at the end of your lives. In terms of ensuring adequate coverage for your own healthcare needs, a reverse mortgage on your primary residence might offer a solution, with the line of credit serving as your “rainy day fund.” With that resource in place, you can move forward with your charitable gifting. (The interesting aspect of a reverse mortgage is that, to the extent you do not draw down the line of credit, the arrangement includes a growth feature, with the untouched balance continuing to increase by the same rate as the interest being charged on the outstanding loan balance). Someday, when the home passes to the charity you’ve chosen, they may choose to pay off the loan and keep the home.

Meanwhile, having a reverse mortgage “fallback fund” in place for unforeseen medical needs tomorrow can allow you to move ahead with those charitable gifts today.

https://mutualreverse.com/david-garrison

Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).

David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.orgEqual Housing Lender

Retiring your home mortgage prior to your own and your wife’s retirement from your respective careers, had been, for many years, an important element in your planning. Now, five years later, after an unsuccessful foray into a part-time business venture and some unexpected home repair costs, you realize that, while you continue to be mortgage-free, you’ve allowed your credit card debt to build up to an uncomfortable level. Odious as the idea seemed at first, you’re considering borrowing once again against your home value, sure that the interest rate will be more favorable than the exorbitant charges on the cards.

While you do have some jointly owned funds and individual IRA rollover accounts, all three of these, as part of your pre-retirement planning, had been set up to generate a fixed amount of quarterly income; although the market results have been favorable, you’re reluctant to upend this carefully arranged system by using the funds to wipe out the debt, not to mention the fear of triggering increased tax bills. Meanwhile, you recall, five years ago, being pleasantly surprised at the increase in your home’s appraised value; you surmise that there has been further increase since then.

As you consider eliminating those credit card debts, substituting those with mortgage   payments, you might find that tapping your home equity through a reverse (rather than a “forward”) mortgage might provide an “easier path”. With a reverse mortgage, there will be no mandatory monthly mortgage payments* (with a reverse mortgage, repayment can be deferred until the borrower moves out, sells the home, or passes away). 

By “trading up” your debt and tapping into your housing wealth through reverse mortgage financing, you stand to gain relief from the pressures of credit card debt. In a way, you will have been given the opportunity to “get back on your financial feet”. 

https://mutualreverse.com/david-garrison

Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).

*Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.org

Equal Housing Lender