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Are There Different Kinds of Reverse Mortgages?

Yes, there are, and to answer your next question – there are three in total. 

The most popular Reverse mortgage, The Home Equity Conversion Mortgage, is managed under HUD (Housing and Urban Development) and insured by the FHA (Federal Housing Authority). In my opinion, this product is the most protected mortgage and one of the most protected financial tools available to seniors. There are many reasons why they are so popular and protective. Here’s a few:

1.The borrowers, their heirs and estate are guaranteed to never owe more than the home is worth, no matter what. This is one of the protections of a non-recourse and FHA insured loan. The home guarantees its value and FHA insures any instances where the balance of the mortgage grows in excess of the value of the home or the value of the home drops. For example, the market bubble in 2006-08. Many folks found themselves living in homes that were valued at less than the note they were paying on the home. If they went to sell the home, they would have owed more than they could get in the sale. This is guaranteed not to happen with the FHA insured HECM. Whatever the amount of differential between 95% the appraised value and the mortgage balance is paid by the FHA insurance. 

2.Homeowners are guaranteed to never come off title. They are still the owners, no one else has an interest in the home from an owner’s standpoint, and they still make all decisions concerning the home. The only way that title would change would be to refinance the HECM, which can be done when financially provable benefits exist. 

3.Homeowners are guaranteed to never have to make a mortgage payment. In the case where they have a current mortgage and are seeking the HECM, proceeds from the HECM will be used to pay off the current mortgage thus freeing up more personal cashflow. In the case where they own the home outright, they will realize more funds from the asset while still maintaining equity in their home. In both cases the homeowners will still be responsible for all property related charges including, HOA dues, taxes and insurance as well as general upkeep and maintenance on the home, just as they are now. 

4.With the three prior items, that means that the homeowners are guaranteed to never have to move out of the home unless they choose to do so. Using the home’s equity to stay in the home is a tremendous benefit and, in many cases, saves the home for the owners. Whether its rising costs outside the home or loss of an income many owners need an added safety net in the liquidity that the HECM provides. There are many ways to realize that liquidity and I will cover them in a later blog

5.The flexibility of payout options and products are diverse and include adjustable as well as fixed rates that can be chosen depending on the homeowner’s goals and or needs. 

The next most popular would be a Jumbo Proprietary Reverse Mortgage:

These are not FHA insured programs but operate in the same manner as far as never owing more than the home is worth. The major differences are as I just stated its not FHA insured, and these are for homes with a value more than the FHA lending limit of $1,149,825 up to $4 million. There are a few companies that provide the jumbo loan, and each one has their own options. When looking into a Jumbo Reverse Mortgage, it is advisable to ask your lender if they service them and who the product belongs to. You will find in many cases that the reverse mortgage company you are working with will be using a proprietary product from another company, this means there is going to be more underwriting stipulations to be satisfied. Generally, that is not a big deal other than being a little more time consuming. Also, with this not being the FHA insured HECM the payout options function a bit differently as well. In many cases you will be required to take a certain amount of cash at closing, growth rates are not for the “life of the borrower” and tend to be smaller. Again, there are adjustable and fixed rate products. It is always advisable to compare with the HECM to determine mathematically which benefits the homeowner more depending on their goals. 

Finally, there is the Single Purpose Reverse Mortgage:

These are provided by nonprofits and state and local governments. They are designed to be inexpensive because they are backed by the government and the nonprofits. While they are like the HECM, single purpose loans limit how the funds can be used. Ultimately the funds can only be used for a single purpose approved by the lender. For example, medical bills or renovations to the home, interestingly, this product cannot be used for more than one purpose. 

There are many more subtle differences and benefits, this is not the entire list. Seniors should always seek out a reputable reverse mortgage lender or loan officer for more education and help to find which product might be best for them. I educate all my clients and potential clients and there is never a charge for the information. The only investment is time to learn!

Donald Battista, NMLS ID 2030959. 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. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Arizona Mortgage Banker License 0926603. Florida Mortgage Lender Servicer License MLD1827. Louisiana Residential Mortgage Lending License 1025894. Oklahoma Mortgage Lender License ML012498. Texas Mortgage Banker Registration 1025894. 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

#201: Using a reverse mortgage to shore up Retirement Chapter 2.

REACHING FOR REASSURANCE IN RETIREMENT CHAPTER 2

Over the final third of your careers, the two of you had done a lot of planning for your retirement years, envisioning trips and activities and planning for a do-over of your home to make it “elder-friendly”. Today, six years into retirement, you’re taking stock. You have, in fact, been able to take a few fabulous trips. Your home surroundings have become more convenient, safe, and beautiful.  Gratitude is in order, you acknowledge,

At the same time, in looking ahead to “Retirement Chapter 2”, you’re feeling less certain. True, you plan on doing less overseas traveling, but everyday rising costs, notably hikes in groceries and gasoline and in your Long Term Care insurance premium, have gotten you more than a bit worried. Those incessant messages about stock market “shakes” and political uncertainties haven’t helped. You are determined to be proactive – and realistic – going into the next phase of retirement life.

Your regular sources of income include your Social Security payments, pension checks from each of your former employers, and regular withdrawals from a jointly owned investment account. (You’ve been careful to keep these withdrawals below 3% of the account value annually, and, so far, this has allowed growth every year). You have taken a long range investment view, staying in the market through all the ups and downs. So far, this combination of systematic withdrawals along with pension, and Social Security income has worked well.

However, you want to feel prepared for a time when that may no longer be the case. Your neighbors have shared an article they’d read about income annuities that guarantee a non-fluctuating monthly or quarterly income as being among “the best protection from market downturns”, and that’s one path you’re considering, along with a more caution-driven portfolio re-balancing.

Rather than upending the investment allocation plan that has served you so well over the years, consider using your housing wealth as a future source of income.  (In fact, your investment in making your home “more convenient, safe, and beautiful” abode might well have positioned it for future appreciation in value!). With a reverse mortgage, you would continue owning and enjoying your home. Your “standby line of credit” or “annuity-like guaranteed monthly income payment” can then be used to keep up with rising insurance and future increases in living costs. 

In reaching for reassurance as Retirement Chapter 2 unfolds, consider your housing wealth.

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).

If your heirs want to keep the home after your death, they will have to repay either the full loan balance or 95% of the home’s appraised value, whichever is less. 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

#200: More about using a reverse mortgage as a deferred annuity

DEFERRED FIXED ANNUITIES & REVERSE MORTGAGES – BROTHERS FROM ANOTHER MOTHER

“Perhaps the best protection from market downturns is a steady stream of income,” Penelope Wang pointed out in a recent issue of the AARP Bulletin After mentioning Treasury Inflation Protected Securities, or TIPs, the author suggests another option: income annuities. In fact, single premium immediate annuities can protect against both longevity and market risk, Dr. Wade Pfau, author of the Retirement Planning Guidebook adds.

Just last week in this Shift Into Reverse blog, we suggested that those interested in securing a future source of steady income can choose to use their housing wealth to create a deferred fixed annuity.  With the value of residential equity having escalated rapidly in recent years, having clients consider setting up a “standby line of credit” based on that increased value might prove in hindsight to have been highly advantageous recommendation, requiring virtually no out-of- pocket cost to the clients, and causing zero drain on their investment portfolio. 

From a financial planning standpoint, this tactic allows homeowners to utilize the benefit of a unique growing line of credit, regardless of home appreciation. When the time is right, clients can initiate the fixed monthly withdrawals in the form of reverse mortgage “tenure” payments. Best of all, the “growth” in the Line of Credit occurs independent of any overall changes in the residential real estate market. (Meaning the home value is locked in at closing and any future depreciation is irrelevant.)

A government-guaranteed reverse mortgage equity line of credit can be a way for clients to use housing wealth today to structure fixed annuity income for tomorrow. 

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

Fact Vs. Fiction, Education Vs. Fear

When we first hear about something we’re not educated on, but have questions, what do we do? We ask friends or look it up on Google. But now there’s so much information out there, it’s hard to know what’s fact. So that’s what specialists are for. We’re here to answer any and all questions you might have on our specialty.

The first time I heard about reverse mortgages, I had no idea what it was. I developed a picture in my mind of the Monopoly Banker running away with grandma’s deed.

Where did I develop that impression? From the negative connotation that’s out there and never fully looking into it. Also, the word “reverse” makes some people think of moving backwards or taking a step in the wrong direction. I don’t know how to correct that other than to use the technical name which is “Home Equity Conversion Mortgage” or HECM for short. Yeah, it’s a mouthful, and some will ask “What the heck is a HECM?” What I would like to do here is talk Fact VS Fiction to iron out the Old VS New. Inaccuracies can lead folks to make decisions that may have otherwise been done differently and could have very different outcomes. 

Let’s talk fact and fiction. I am going to use a website called “Answer the Public” for the most searched Reverse Mortgage Questions. 

1. Does the lender take your house?  Fact: You always remain on title and keep ownership. You must keep up your property related charges such as property taxes, homeowner’s insurance, any HOA dues, and general upkeep. Fiction: The “bank” owns more of your home than you do and can evict you at any time for any reason. The term “bank” is incorrect as most banks don’t offer these mortgages and don’t understand them. Mortgage lenders take the time to train and educate their specialists and, in my case, we only allow people to do this type of mortgage (not conventional etc.), they can’t just originate one because they want to or know someone who is looking at one. 

2. How does a reverse mortgage work? Fact: Every state may have some differing rules, but in general it allows you to convert some of the equity in your home (never all, and at most 60%) into liquid funds by a number of ways that make it one of the most flexible financial tools there are. Fiction: You will only get pennies on the dollar for the total value of your home. 

3. The fees are tremendous. Fact: They are not paid out of pocket they are paid for with equity. They must be calculated out over the life expectancy of both borrowers because this is an open-ended loan. Meaning the homeowner can stay in the home as long as they like with absolute guarantee that they will never have to move or make a mortgage payment for as long as the live, as long as they meet those obligations noted in question 1. I can’t quote fees here because every situation is different, but math tells you that the longer you live in the home the smaller the fee percentage at the beginning becomes. Fiction: These fees are enormous and to quote Dave Ramsey “predatory”. FACT+1. If you were to calculate moving to a smaller home (rightsizing) and calculated the fees for selling and purchasing, they would probably be more than the fees for the HECM.

4. Once I die, the bank owns my home. Fact: Once the last living borrower exits the home permanently their heirs and or estate have time to decide what they want to do with the home. They can keep it and pay off the HECM or sell it and keep the funds above and beyond the balance of the HECM. They can also in some cases if it makes more sense sign the home over to the lender and not be held negatively liable for anything. Fiction: As soon as I pass away the lender takes ownership and anyone else living in the home is evicted. 

5. I don’t need a HECM unless I am cash poor and house-wealthy. Fact: I have plenty of financial advisors, fiduciaries, and other financial professionals as well as real estate and elder legal professionals that I work with, who see this is part of a well-planned out retirement roadmap and not a life raft at all. While it can be used in an emergency most are now seeing that it’s growth potential and tax-free funds cannot be denied. Fiction: When all else fails and we are completely broke then we can use our equity, but only then does it make sense. Once the emergency red lights are flashing!

Fact+1: I would rather a client use the growth and liquidity that the HECM provides when they want rather than when they must. When it is most beneficial to them, not just to throw them a rope in the storm. 

So, this is just a small sampling of the Fact VS Fiction that should be ironed out before writing off the HECM as a very flexible and viable financial tool. I will leave you with this fact. The house is the largest investment for most Americans. It represents 2/3 of our net wealth. It just happens to be an investment we live in. If you bought a stock 30 years ago at $25 per share and its now $325 per share, would you not take some of that profit? This program can unlock some of that profit and put it at your disposal while it grows, rather than staying buried in the foundation of the home. 

Donald Battista, NMLS ID 2030959. If your heirs want to keep the home after your death, they will have to repay either the full loan balance or 95% of the home’s appraised value, whichever is less. 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. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Arizona Mortgage Banker License 0926603. Florida Mortgage Lender Servicer License MLD1827. Louisiana Residential Mortgage Lending License 1025894. Oklahoma Mortgage Lender License ML012498. Texas Mortgage Banker Registration 1025894. 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

#199: Using a reverse mortgage as a deferred annuity

USE HOME EQUITY NOW TO GROW FUTURE INCOME STREAM

You consider yourself (your spouse generally agrees with this assessment) a very reasoned person when it comes to handling financial decisions. Now retired and in your early 70s, you’ve been witness, over the years, to some of the best and worst times in the stock market. While you continue to believe in maintaining a steady course and sticking to your long term plan, the extremely volatile political climate of today, along with predictions of a dramatic drop in equity markets, are starting to spook you a bit.

You have four regular sources of income: Social Security (for both of you), your wife’s teacher’s pension, regular withdrawals from your IRA Rollover account, and a quarterly distribution from a fixed annuity. Meanwhile, your jointly owned investment account serves as a backup emergency fund. Your home is fully paid for and well-maintained (although there has been a sharp increase in repair and maintenance costs) and the plan is to spend the rest of your lives there. (You’ve watched the market value of homes in your neighborhood more than quadruple – is this a bubble doomed to burst, you wonder?)

Regardless of the future direction of either the investment or real estate markets, one planning tactic you might consider is using home equity via a reverse mortgage line of credit to create a kind of deferred fixed annuity. You’re already familiar with the concept of an annuity, which pays a guaranteed income based on your joint life expectancy at the onset of the payout. By taking out a reverse mortgage on your home (doing it now, while the value of your home, as you pointed out, is at a high level), you would be arranging for a standby line of credit, “turning on” an income stream at some point in the future. 

Between now and the time you chose to turn on the annuity payout, the unused portion of your equity will be growing, creating a higher annuity payout when you’re ready to take it. Best of all, that guaranteed “growth” will happen independent of any overall changes in the residential real estate market.

An FHA-insured reverse mortgage equity line of credit is a way to use housing wealth today to structure fixed annuity income for tomorrow.

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).

Please consult a tax advisor. If your heirs want to keep the home after your death, they will have to repay either the full loan balance or 95% of the home’s appraised value, whichever is less. 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

#198: Using a reverse mortgage to avoid excess taxes on Social Security

REVERSE MORTGAGE – A “NEW” IDEA THAT DOESN’T TRIGGER “NEW” TAX 

In your seventh year of retirement (you’re 69, he’s 73), you’re becoming increasingly concerned with rising everyday costs, especially those for food and gasoline. You home is fully paid for and you’ve kept it well-maintained, so that’s not a present concern. As you consider ways to generate more income, you realize that the bulk of your financial assets consists of two quite healthy IRA rollover accounts, You’re worried that substantially increasing the amount you take out of those accounts will increase not only your taxes in general, but the taxes you’re paying on your Social Security benefits. You do own one joint account with tax-free mutual funds and money markets, but you’re comforted by having that as an emergency backup. Your estate plan has been updated, including paid-up life insurance policies that can be used for long term care if needed. You believe that your focus now needs to be on increasing the income stream net of tax.

Assuming your intent is to continuing living in your home, one strategy you might consider is tapping the equity in your home in the form of a reverse mortgage. Regular withdrawals from a HECM set up as a line of credit would be tax free (so you could take less), and would have no effect on MAGI (the Modified Adjusted Gross Income calculation that might increase the tax on your Social Security benefits). You might even be able to reduce your regular IRA withdrawals, further enhancing your level of after-tax net income, all without tapping your emergency backup account.

You’ve obviously devoted careful thought to your overall financial situation, examining options for keeping up with rising costs of living. A reverse mortgage might be the “new” idea for accomplishing that very goal without triggering “new”: taxes!

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).

Please consult a tax advisor. If your heirs want to keep the home after your death, they will have to repay either the full loan balance or 95% of the home’s appraised value, whichever is less. 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

#197: The importance of sharing your plan with heirs

REVERSE MORTGAGE PLAYS PROMINENT ROLE IN ESTATE PLAN

Now about to “really retire” at ages 71 and 70 (you have each continued to work part time for the past five or six years), you’re in the process of updating your investment and estate plans. Having now made the firm decision to remain in your present home, you’ve been looking into financing a major remodel/restructure of the property using a reverse mortgage. You’ve discussed the wisdom of sharing your intentions with your two adult children. While they are equal beneficiaries of the house itself, there are other parts of the estate plan that treat the two differently because of a significant difference in their financial status., but you want them to be aware of their options in terms of the property.

In general, sharing your estate plan with heirs reduces uncertainty and conflict for them later on. The family discussion can give you the chance to explain your own decision making process relative to your home, allowing them to understand the options they will have. You may or may not want to include other aspects of your estate plan in this discussion. (When the editors of Kiplinger’s Magazine asked financial planners their opinion about parents treating heirs unequally in an estate plan, most advised open disclosure, “loving your kids equally but treating them uniquely”, with a second concluding “This doesn’t cause resentment because they’ve been open about it, and communication is key”..

As heirs of a home with a reverse mortgage in place, your children will have no responsibility for any deficit in the unlikely event the home is worth less than the debt at the time of the second of your deaths. On the other hand, should the children decide to sell the property and the proceeds exceed the amount owed on the mortgage debt, those excess funds will go to them. No sudden decision will need to be made, as they will have up to 360 days to decide how they wish to proceed.  (Should they decide to sell, they will still need to keep the utilities turned on and the insurance maintained until the house transfers title.)  As you’ve intuited, explaining all this now will prove reassuring to your heirs.

Congrats on your new “fully retired” status, as well as on your thoughtful consideration of estate planning options.

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).

If your heirs want to keep the home after your death, they will have to repay either the full loan balance or 95% of the home’s appraised value, whichever is less. 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

#196: Dealing with a reverse mortgage during a divorce

WHEN DIVORCE DO US SENIORS PART 

You wryly describe your situation as a “gray marriage turned black”. When you (a widower) and she (a divorcee) married six years ago, you bought your present home together, financing it through a combination of equal contributions of cash and a HECM-for-purchase reverse mortgage. 

Your soon-to-be ex has already moved out of the house; you hope to live there for the rest of your life. Negotiations and demands have been floating back and forth, with no final decisions having been made. Among other demands, she is asking to be reimbursed for her part of the original purchase plus half the cost of the new furnishings you bought together. 

With you listed as co-borrowers on the reverse mortgage, one choice would be to sell the home and use the proceeds to pay off the mortgage balance, splitting any excess proceeds.  However, since you have decided to remain in the home, the divorce decree may require a payoff to your soon-to-be ex. You would not be obligated to pay anything to the mortgage company until such time as you are not longer living there (the lender may require a copy of the divorce decree in order to remove her from the debt). Any payments you are ordered to make to her might or might not be financed through further reverse mortgage borrowing.

It’s always a very sad affair when a marriage “turns black”, and you will need to rely on legal counsel as you go through the stages of divorce, using the benefits of the reverse mortgage to realize your goal of “aging in place”.

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).

If your heirs want to keep the home after your death, they will have to repay either the full loan balance or 95% of the home’s appraised value, whichever is less. 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

#195: The place of reverse mortgages in retirement planning

REVERSE MORTGAGES TAKE RIGHTFUL PLACE ON CLIENTS’ NEED-TO-KNOW LIST

Fully three and a half years ago, in an early Shift Into Reverse blog post, we addressed the compliance principles that apply when financial advisors discuss with clients products they themselves are not licensed to sell, such as property/casualty or long term care insurance and reverse mortgages. “Your function” we advised, lies in pointing out the need, recommending to the client to seek the advice of a specialist.

Today, for both advisors and clients, reverse mortgages have been moving ever-higher on the list of “need-to-know-about” topics. In recent months, home equity among people 62 and older has reached an all-time high (greater than $13 trillion as of late last year), coinciding with a record wave of people moving into their 60s, Investment News points out.

In addition to that combination of circumstances, even for those financially well-off, a market downturn could make the idea of a reserve mortgage attractive as a way to reduce sequence-of-returns risk, Dr. Wade Pfau, retirement researcher and professor at The American College of financial Services notes, calling reverse mortgages a “buffer asset”.

With a 42% increase in home values since the summer of 2020 in our state of Indiana (according to the Business Research Center at Indiana University, housing wealth has become an even more significant element of net worth.

While financial advisors need to refer clients to a reverse mortgage specialist to execute the transaction, fort a growing number of retiring individuals, the reverse mortgage can help people maximize their invested assets, and, as Wade Pafau notes, even result in clients “ending up leaving heirs with more than they otherwise might.”

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).

If your heirs want to keep the home after your death, they will have to repay either the full loan balance or 95% of the home’s appraised value, whichever is less. 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