TAKE IT FROM YOUR UNCLE — REVERSE MORTGAGES FUND FINANCIAL GOALS

“Reverse mortgages emerging as retirement planning tool for high-net-worth homeowners,” a recent KDH news headline reads. Dionne Warwick might ask, “What’s it all about, Alfie?”, but the answer is far from puzzling. While in earlier years, KDH explains, reverse mortgages were associated with retirees facing financial hardship, today, affluent homeowners use them for strategic financial planning.

It is to be noted that, over the past six years, in this Shift Into Reverse blog, we’ve been mainly referring to federally insured reverse mortgage loans, there are also proprietary, so-called “jumbo” reverse mortgage loans available for use by high-net-worth homeowners. As “private” loans, these “jumbos” allow homeowners younger than 62 to leverage their home equity, and also allow access to a larger percentage of housing wealth.

At a recent family gathering, you got into a conversation about financial matters with your 58-year-old nephew, who proceeded to “pick your brain” about retirement planning strategies he and his wife have been contemplating. Knowing that, years ago, you and his aunt had taken out a reverse mortgage, your nephew wanted to learn more about your experience. While he may be too young to qualify, you’re enjoying the fact that as a highly successful entrepreneur who is far, far wealthier than you have ever been (and owns a home valued at multiples more than yours); appears to value the advice of his eighty-three-year-old uncle…. 

What you shared with him is that, for you, freeing up the equity in your home allowed you to finance the rather extensive repair/remodeling that enabled the two of you to “age in place”; you were able to accomplish that goal without interrupting or reducing the cash flow from your portfolio. Your nephew, in contrast, is not contemplating retirement any time soon, but is wanting to have access to financial resources for business purposes. He wants to increase his exposure to what he describes as a “historically exciting business investment climate”.

Not all reverse mortgage candidates “need” financial help; as is true of your nephew, financial secure borrowers are looking for liquidity and flexibility. Your nephew might qualify for a proprietary or “jumbo” reverse mortgages (which are private loans not insured by the Federal Housing Administration), which allow for homeowners over age 55 to access their home equity. What’s more, while the current limit on reverse mortgages is just over $1.2 million, jumbo loans for qualifying borrowers can be as high as $4 million. 

Your nephew will need to speak with a reverse mortgage professional, but you can share with him that, just as has been true on your own reverse mortgage loan, jumbo reverse mortgages are non-recourse, meaning that borrowers will never owe more on the loan than the appraised value of the home. What’s more, unlike the case with your loan, where you needed to pay mortgage insurance premiums both at closing and as an ongoing annual cost, jumbo reverse mortgage borrowers do not pay insurance premiums.

“Take it from your eighty-three-year-old uncle”, you can say – “as a high net worth, not-yet-retired, homeowner, you nephew might wish to explore the many uses for jumbo reverse mortgage funding…”

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

HOME EQUITY HELPS DAD AND DAUGHTER HELP EACH OTHER

After your wife’s passing more than a decade ago, you made the decision (you were 71 at the time) to spend your remaining years in the familiar surroundings of your home. While all your children stay in close touch, your sons and their families live quite far away; your daughter, a healthcare worker, has always been nearby. The oldest of your three children, divorced these many years, your daughter has struggled financially. Yet, among the siblings, she’s proven the most devoted to your welfare. 

Over the past couple of years, your health has been on somewhat of a downward path, and, while you’ve been able to remain independent, it has become more challenging to manage home maintenance and upkeep. Driving is still possible, but it’s become evident that you’re going to need some help, at least a couple of days each week, to relieve your daughter, who has been helping with the shopping and food preparation.  

Through church, you attended a talk about reverse mortgages. You’ve been considering that idea for yourself, given that your home is mortgage-free and, judging from a recent sale in the neighborhood, has grown substantially in value over the years. Tapping into that value, you realize, might be the only way to afford home health care. 

Meanwhile, though, your daughter has suggested moving in with you, which would save her having to pay apartment rent. Your home is certainly large enough, she points out, to afford the privacy she’d need. With her help, she adds, you would not be burdened with paying for expensive home healthcare.

While, on the face of things, the idea of having your daughter right there is very appealing, you want to be sure you’re not putting your own needs ahead of her future security. She would need to be guaranteed the right to remain in your home in the event your health deteriorates to the point of having to move to a hospital of nursing home. Does a reverse mortgage still fit this situation, you’re wondering?

If your daughter is 62 or older, she can become a co-borrower on a HECM reverse mortgage, which would guarantee her the right to remain living in the home if you were not longer able to stay there (either because you’ve had to go to a medical facility or you’ve passed). However, because the reverse mortgage loan calculation will be based on the age of the youngest borrower, the available loan amount is going to be significantly reduced. If, on the other hand, you decide not to have her as a co-borrower on the reverse mortgage loan, when the time comes that you have not been able to occupy the home for more than a year, your daughter would need to pay off the balance in order to remain in the home.

According to Psychology Today, nearly one in eight adults in the U.S. is caring for an aging parent, and “family caregiving is increasingly recognized as a normal phase of the parent/child life cycle.” Finding and paying for home health care, the authors note, is a real challenge. With your daughter a healthcare professional (and willing to live in your home), it certainly sounds like an arrangement worthy of serious consideration (with both an estate planning attorney and a reverse mortgage professional). 

With reverse mortgage funding, your home equity can help you and your daughter help each other.

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.org

Equal Housing Lender

IT MIGHT PAY TO REPAY YOUR REVERSE MORTGAGE LOAN

Some five years ago, having arrived at a decision to spend your retirement years in the home you’d owned for decades, you two made a couple of related, very important choices: First, you applied for a reverse mortgage, using the equity built up in the home itself to finance an upgrade of the heating/cooling system and a bathroom remodel, but also to finance the purchase of a health and wellness center franchise. After successfully operating that business, you’ve just recently accepted an attractive offer to buy out your franchise interest.

When first weighing the pros and cons of the reverse mortgage, you were encouraged by the fact that there was going to be no need to make monthly mortgage payments,* and that there would be no tax on any withdrawals of equity. Now that you are about to come into a sizeable sum of money, you’re wondering whether it will be a good idea to put that cash “back into the house” by voluntarily repaying a large portion of the reverse mortgage loan. 

When you make a voluntary payment into your reverse mortgage account, you increase your available line of credit for any future need that may arise, while reducing the compounding of the interest rate being charged on the loan. Remember, any unused portion of your equity continues to grow at the same rate as that being charge on borrowed funds. 

Rates on reverse mortgages are higher than they were five years ago, so paying down the loan balance limits the amount of equity being consumed by higher interest charges. Repayments mean increasing your borrowing power for future needs. 

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.org

Equal Housing Lender

THE REVERSE MORTGAGE – THE FINANCIAL PLANNING SWISS ARMY KNIFE

Some five years ago, in an early Shift Into Reverse blog, we addressed head-on the compliance concerns of  financial advisors, underlying their reluctance to discuss with clients products they themselves were not licensed to sell (such as property/casualty insurance, long term care policies – or reverse mortgages. Your function, we suggested to advisors, lies in pointing out the possibility that such products might satisfy a specific need, then recommending that the client 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. “Over the past 15-20 years, the industry has seen a significant increase in consumer protections,” HECM World explains.”The best originators approach conversations as advisors, positioning themselves around solutions rather than products.” According to the National Reverse Mortgage Lenders Association, reverse mortgages jumped 6.23% in 2025. Why the increase? G. Brian Davis suggests a number of reasons:

• Seniors outnumber children in nearly half of U.S. counties.
• Home prices skyrocketed over the past five years, supercharging many seniors’ home equity.
• Inflation has left many retirees “house rich and cash poor”.
• A slowing labor market has impacted post- retirement income supplementation
• ¾ of senior Americans said they want to age in place, which translates into the need for home modifications to caregivers.

Just some of the many solutions we’ve chronicled in this blog include:

• Mitigating sequence of returns risk for retirees (in case markets drop in the early years of retirement)
  
• Establishing a Growing Line of Credit: The unused portion of a HECM (Home Equity Conversion Mortgage) line of credit grows over time, regardless of home value fluctuations, giving the homeowner access to an expanding emergency fund.
  
• Delaying Social Security: Client can draw on reverse mortgage proceeds to cover living expenses in early retirement years, allowing your Social Security benefits to grow to their maximum potential.
  
• Funding Healthcare & Long-Term Care: Proceeds can be utilized to pay for in-home care, long-term care insurance premiums, or sudden medical expenses.
  
• Financing the tax on a Roth conversion.
  
• Funding for aging-in-place remodeling of property.
• Replacing expensive riders on Long Term Care Insurance.
  
• Funding grandchildren’s education costs or business startups.

As Wade Pfau, PhD, CFA, Professor of Retirement income at the American College of Financial Services notes: “The reverse mortgage option should be viewed as a method for responsible retirees to create liquidity for an otherwise illiquid asset, which in turn can create new options that potentially support a more efficient retirement income strategy (more spending and/or a greater legacy.”

Fact is, the reverse mortgage has developed into a “Swiss army knife” tool that can be used to fill an expanding variety of problem solutions for clients. Ironically, far from diverting client assets, in many cases, the solutions offered through reverse mortgages result in increasing Assets Under Management for the advisors.

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.org

Equal Housing Lender

HOUSING WEALTH ALLAYS FEAR OF “SOCIAL INSECURITY”

Having put quite a bit of thought into planning for your retirement (coming up at the end of this calendar year), the one piece of the puzzle that you’re most hesitant about is the timing of claiming your social security benefit. Your situation is a fairly simple one – divorced, debt-free (both house and car paid for), planning to continue living in your home, do some modest travel, and continue acting in community theater. Neither of your adult children needs or expects your financial support, and you do have a “hybrid” life insurance policy that can help fund long term care should that become necessary. From an income standpoint, there will be some modest pension income from a long-ago employment contract, and you’ve worked out a systematic withdrawal plan from the rollover of your current 401K. (You have a substantial HSA account that will help with medical expenses, and, as an avid do-it-yourselfer, you’ve always been able to handle home maintenance.

The one almost maddening decision that faces you is the timing of claiming social security benefits. Since, upon retirement, you’ll be 65, your so-called Normal Retirement Age won’t come for a couple of years. According to the advice you read, it pays to delay claiming taking benefits until age 70, to “maximize lifetime benefits.” In reasonably good health yourself, it’s the health of the Social Security system you’re worried about. You literally just read the following on Realtor.com: “Social Security could reach insolvency by late 2032 or early 2033…Waiting until age 70 to start collecting Social Security locks in the highest monthly payment, but claiming earlier may help protect against possible cuts.” 

While you’ve obviously devoted careful thought to various aspects of preparing for your upcoming retirement, you might focus on one piece of the puzzle, your housing wealth, and consider using that to counterbalance your concerns about social security, setting up a reverse mortgage line of credit. You can wait until age 70 to claim Social Security benefits. If the “doomsday” predictions of insolvency prove true (which would no doubt mean benefit cuts, not total elimination of Social Security income), you’ll have a backup income-supplementation plan.

Unlike withdrawals from your investments, reverse mortgage distributions are income-tax free.* Meanwhile, the “unborrowed” portion of your housing wealth will be guaranteed to grow, tax-free,* at the same rate of interest as that being charge on the mortgage loan itself.

You’re hardly along in your concerns. As a piece in Fox Business says, “Americans are rethinking when to retire and claim Social Security as longer lifespans collide with uncertainty about the program’s future.” On the positive side, your housing wealth has the power to allay those fears, allowing you to execute your carefully thought-out retirement plan with confidence.

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.org

Equal Housing Lender

HOME EQUITY MAKES PARTING MORE SWEET THAN SORROW 

Several years after your spouse passed away, you remarried. Hoping to spend the rest of your lives together, your new spouse sold her condo and used the proceeds to completely renovate your home. As part of the process, the home was retitled in both of your names.

Now, with your marriage in the process of ending due to the decision of getting a divorce, you’re more determined than ever to hold onto the one asset that has been part of your life for half a century, your home. Fortunately, your spouse isn’t contesting that decision. She plans to move out of state to be closer to her daughter, and both of you are working to keep the divorce as amicable as possible. You gave it your best shot, but things simply didn’t work out.

The challenge is that most of your investment assets are held in an IRA rollover account, leaving you without enough readily available cash to buy out your spouse’s share of the home’s equity. In addition to the potential tax consequences of liquidating assets, you’ve spent decades carefully building and managing your portfolio with the help of trusted advisors. While you receive moderate pension and Social Security income, you’d prefer not to deplete your cash reserves or short-term investments.

In a situation like this, tapping into your home’s equity might prove to be the best source of funds for your divorce settlement. Once you can document that you are again the sole owner of the property, you may be eligible to obtain a reverse mortgage. The proceeds can then be used to fund the agreed-upon divorce settlement and compensate your former spouse for her investment in the home’s renovations.

Going forward, you would continue to pay property, not real estate taxes and insurance (on the newly appraised value of the home, of course), but there will be no monthly payment due. Any unused portion of your equity will be credited with non-taxable growth at the same rate as that being charged on borrowed funds.

Rather than drawing down your investment portfolio, you would be using a portion of your home’s equity to buy out your former spouse’s interest in the property—allowing you to remain in the home you’ve cherished for decades.

For more information, visit David Garrison’s Reverse Mortgage Resources.

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.org

Equal Housing Lender

USING HOUSING WEALTH TO FUND A SPECIAL SCHOLARSHIP

Now both “officially” retired, you each continue to bring in gig income from personal coaching and speaking engagements. With no children or grandchildren (and therefore no need for extensive living space), you’ve nonetheless made the decision to spend your retirement years in the home you’ve occupied for decades, and which you’ve kept in excellent repair.

Despite the vagaries of the market – and the alarming increase in gasoline prices – you feel pretty well prepared financially going forward.

In fact, you’ve been giving thought to establishing some kind of annual scholarship fund through your alma mater (the university where the two of you met and earned both undergraduate and advanced degrees). The goal is to encourage students to select majors in environmental studies.

While you’re both committed to the concept, there is some concern about tapping your investment portfolio or retirement accounts to maintain the funding requirements years into the future. There is the possibility of using stock you inherited from your own parents as the original donation for the first year. Going forward, though, neither of you is comfortable committing one large upfront sum – you have decided you’d prefer to make this an annual gift.  

Once having funded the first annual scholarship with the stock, going forward, you might consider tapping into your own housing wealth using a reverse mortgage set up as a line of credit. Each year, you can withdraw from that line of credit, tax-free.* (Your tax advisor will verify that you can still qualify for a tax deduction on the contribution to the scholarship fund!) 

You’re rightly concerned about your own financial “safety environment” in future years. Yet using the equity in your home as the scholarship funding source avoids the need for you to tap the investment portfolio or retirement account, all while realizing your dream of encouraging those who’ve chosen the field of environmental studies.

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.org

Equal Housing Lender