With the vast amount of information on financial topics being served up to your clients on a daily basis, you’re tasked with helping them separate wheat from chaff. When it comes to the topic of reverse mortgages, you’re finding, conflicting statements and claims are leaving even you confused and uncertain, worried about staying compliant while providing needed guidance.

In Why Suze Orman Hates Reverse Mortgages” (an article your client brought to your attention, the authors cite Orman’s opinion that reverse mortgages are “not always a flexible option”, because borrowers must continue to pay to property taxes, homeowners insurance, and home maintenance costs, which can be especially challenging for older Americans on a fixed income.”: (Well, yeah, tax authorities and mortgage lenders of any type want to be paid.)  In FA Magazine‘s The Complex Truth About Uncle Sam and Reverse Mortgages, the author states that “The income from reverse mortgages counts against eligibility for Medicaid and Supplemental Security Income”.  (Upon further exploration, you read in reversemortgageguides.org that “a reverse mortgage does not automatically disqualify a homeowner for SSI, but the homeowner has to be careful with the timing of spending the reverse mortgage funds.”. Representing a positive view, Professor Finke of the American College is quoted in the FA Magazine article as saying “Failing to tap home equity means leaving joy on the table for a retiree who does have a strong desire to leave wealth to others”.

As an advisor, you’re wise to be cautious about recommending any tactic or product outside your expertise, What is, of course, within your purview is helping pinpoint the specific problem your client needs solved, what alternatives (including using housing wealth) need exploration, and what the costs of “doing nothing’ about the clients issue: might be, Arranging a consult with a specialist in government-insured reverse mortgages might be the next best step.

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).

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The two of you have always felt blessed in having your only two grandchildren living a mere 30 miles away. Even with you, both in your mid-sixties, still working full time, you’ve enjoyed having the grandkids spend many a weekend at your home. Unfortunately, your son-in-law has filed for divorce; he has already moved to Ohio in order to take advantage of a job opportunity – and, you’ve learned, to share his life going forward with a new partner.

Your daughter is a traveling nurse, regularly away from home. Your first thought was to have her and the children move in with you during this terrible transitional period. That, however,  would mean moving the kids out of their school; district and away from their friends and activities. With attorney meetings and mediation sessions being scheduled, your daughter is being forced to consider turning down out-of-town nursing assignments for the next few months, which she can ill-afford to do.

You’re assessing your own finances in order to come to the rescue quickly. As a couple, you are essentially debt free, but, other than modest cash reserves, all your investment resources are inside a 401K and a SEP, and the tax ramifications would be very negative.

One tactic to consider is using the equity built up in your home to generate cash to help your daughter and grandkids. With a reverse mortgage equity line of credit, you will be able to make tax-free withdrawals of cash on an as-needed basis, with no requirement to make monthly mortgage payments. With your financial help, your daughter would be able to spend more time at home, allowing the children to remain in familiar surroundings with no interruption to their schooling or activities.

Once the divorce and support negotiations have concluded, your daughter will be in a better position to evaluate her work arrangements and make the best long term career decisions for herself and her children. The two of you, meanwhile, will have provided needed transitional support without negatively impacting your own retirement goals.

Your housing wealth can be the secret to helping your grandkids weather the upheavals of divorce without adding the upheaval of changing home or school.

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It has now become obvious that, with yet another announced steep hike in the long-term care premium, you are on the brink of totally “drying up” the life insurance “well.” Meanwhile, although you have seen some nice growth this year in your investment portfolio, most of your funds are in retirement accounts, and withdrawals would trigger tax* (precisely the effect you had been trying so hard to avoid by paying premiums with funds transferred out of the life insurance)!

Consider allowing the equity built up in your home to “take over” the task of providing tax-free* funding of premium payments needed to keep your long-term care insurance policy alive. With a reverse mortgage set up as an equity line of credit, you will be able to pay the long-term care premiums without triggering income tax liability.*

Just as when a rescuer is performing CPR and a second person is available to relieve the first, the asset value you’ve built up in your home can ‘take over” the function performed by the cash value in your life insurance policy, keeping your lifetime long-term care protection – protected.

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*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.

As a long time real estate professional, you’ve always prided yourself of finding solutions to serve your clients’ needs. This is a tough time, you’re finding, for seniors. Many of the folks whom you helped purchase homes years ago are now finding those homes much too big for their needs and not easily adaptable to their less active lifestyles. With home prices in and around Indianapolis having dramatically escalated over the intervening years, it’s been a challenge getting those clients to take action. Not wanting to take on mortgage payments, they’re reluctant to tap their investments to cover the costs of a new purchase.

As their trusted advisor, you might help clients tap into their “housing wealth” they’ve created, helping them apply for HECM-for-purchase reverse mortgage loans. While coordinating the timing between the sale and the purchase can be tricky, the plan can work best for where seniors are having their new home built and the departure from their old home can take place in close proximity to the move-in to the new.

Using reverse mortgage financing addresses both the common concerns you’ve mentioned: Your clients avoid the need to tap into their investment holdings to afford a higher-priced home, and also avoid any need to take on monthly mortgage payments. (The “silent” mortgage balance is not due until the borrowers either permanently depart the home or sell.)

An added benefit to you, the realtor, is that your seniors are the largest single buying demographic in the USA today and a focus on them can help kick start your business in these very competitive times.

Reverse mortgage financing can help you help senior clients (and you) to “buy up” while “sizing down”.https://mutualreverse.com/david-garrison/

Learning that the Supreme Court has struck down the President’s plan to forgive student loan debt, you knew immediately how severe an effect that decision would have on your younger sibling’s family. A hard-working single mom, your sister is very proud of her two sons, both of whom remained focused on their studies throughout college and are now trying to launch careers (in architecture and engineering, respectively). The boys’ father has never been in a position to be of help, and the boys have been sharing an apartment in order to save money, bartending on weekends to bring in extra cash. Both began making student loan payments nine months ago, with you offering occasional cash gifts in order to ease their burden. As proud uncle, you had been closely following the “Uncle Sam” student loan forgiveness proposal. You’ve decided to step in and offer more substantial help, at least until the nephews’ earnings have increased and until their respective careers appear to be on a secure track.

As a widower with no children of your own, you are in a position to offer help to your to your nephews, but you want to be able to control the timing of the gifts. Your idea is to make a lump sum gift to each now, then continue to follow their progress. The first time, you plan to give each nephew $17,000 (the annual exclusion limit for this year) From a US News Article

on the subject, you’ve learned that your nephews can use that gift money to pay off accrued interest and/or pay down principal, and you plan to have them attribute the gift money to principal.

While you have sufficient cash reserves to fund the $34,000 gift, going forward, you would like to come up with a more long-term plan that would not necessitate cashing in investments or negatively affecting your own lifestyle. You might consider “tapping” your own housing wealth, arranging a reverse mortgage on your residence, set up as a line of credit. Withdrawals from the line of credit would be income tax-free; whatever portion of your housing wealth is not being used would be credited with growth at the same rate as the interest being charged on the reverse mortgage loan balance.

It could be that, as your nephews move forward in their careers, that their employers might offer paying off some portion of their student loans. A Provision in the Cares Act allows employers to contribute annually towards paying off an employee’s student loan.

Your sister may have experienced chagrin over the Supreme Court decision, but your nephews will be proud to call you “Uncle”!

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)

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The two of you have always committed to taking care of both sets of elders. With your mother-in-law having recently passed, your father-in law, in his early nineties, insists he wants to “age in place”, continuing to live in the modest two-story home they’d owned for many, many years. You and your wife are going to pay for whatever home modifications are needed to make that possible for him. In the course of researching different options, you’ve concluded that a home elevator might actually be easier for your father-in-law to use than a stair-lift.

 In fact, you have become excited by the possibility of having an elevator installed in your own home as part of an already planned remodel, avoiding the need to someday move your master bedroom to the main level. (Your own parents moved years ago into a retirement community that offers assisted living, that lifestyle is not your first choice.) 

While you had set aside cash for the original remodel plan of your own home, in order to pay for both elevators, you would need to cash in investments, triggering some tax costs. With talk of interest rates easing in the near future, you’ve considered a home equity line of credit.

An alternative way of using the equity accumulated in your home would involve a reverse mortgage. Withdrawals from the line of credit would be tax-free, avoiding the need to trigger tax events by cashing in investment holdings. While allowing your father-in-law to remain in his home, you can make your own residence more aging-in-place suitable. Meanwhile, whatever portion of your housing wealth is not being used will grow at the same rate as the interest being charged on the reverse mortgage loan.

You might say that the combination of home elevators and a reverse home equity loan can allow both your father-in-law – and the two of you –  to “move up and down without moving out”!

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)

https://mutualreverse.com/david-garrison/

Despite your having made clear to your two children that, once they were through with their schooling they would be expected to manage their finances on their own, you now find yourselves feeling differently when it comes to your twin granddaughters. Passionate and very hardworking entrepreneurs, the girls are in sore need of a financial boost to keep their floral business competitive. They are trying to break into the wedding planning market with a new concept.  You’re not in a position to “invest” giant sums, but you would like to, over the next year or two, “invest” as much as a few hundred thousand dollars.

You’re satisfied that, turmoil in the investment markets notwithstanding, your own financial situation has remained stable. With your home paid off and in good repair, you’re hoping to live out both your lives in place. From a financial standpoint, you’ve been able to manage well on retirement plan and other investment income and social security. You would be able to gift some cash to the granddaughters without disrupting the portfolio, but not in the amounts really needed to make a difference.

You might consider using the equity you’ve accumulated in your home as the source for funding investments in your granddaughters’ business venture, by arranging a reverse mortgage line of credit. There will be no principal or interest payments due, and therefore no effect on any of your current or future sources of income. Any withdrawals you make to invest in your grandkids’ business will be tax-free. Meanwhile, the unused portion of the credit line will be credited with growth at the same rate as the interest being charged on the loan.

Your housing wealth might be just the ticket to helping your granddaughters create wealth of their own.

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)

https://mutualreverse.com/david-garrison/

With no formal training in finance or accounting, the two of you nonetheless pride yourselves on discussing important financial matters and (after consulting your advisors), coming to your own conclusions. You’re both close to age 67, and after dealing with various health issues in recent months, you arranged to retire at the end of 2023 (several years earlier than originally planned). Fortunately, none of the medical challenges necessitate moving to a facility; it is very feasible for you to continue to “age in place”, and your home is fully paid for and in excellent repair.

The issue under discussion with your financial advisors is whether you should apply for (or defer applying for) social security benefits. You’ve been given several reading pieces about the so-called “tax torpedo”, referring to the fact that up to 85% of Social Security benefits can be counted as taxable income. On the other hand, while you have built up a very nice investment nest egg (even given the choppy market of late),and will have modest deferred compensation assets available for both of you, you want to be prepared to hire at-home healthcare help if needed.

Another reading piece that should prove of interest is an article that appeared in Kiplinger three years ago: ‘”In challenging times, federally insured home equity conversion mortgages offer an outside-the-box income option for those 62 and older,” Charles Rawl, CFP®, RICFP® wrote.

See Article

Consider using your own housing wealth as the “backup resource” in the event you need future in home medical care. With a reverse mortgage, there will be no monthly mortgage payments. In fact, the unused portion of your line of credit will continue to earn interest at the same rate as that being charged on the borrowed funds. Meanwhile, you can work with your tax advisor on either handling – or deferring – the Social Security “tax torpedo”.

As you “age in place”, you’ll be assured that, should home healthcare become a necessity, you have a funding resource already “in place”!

https://mutualreverse.com/david-garrison/

Moving into your home some twenty years ago, you were both thrilled with its woods-like setting. Now that three recent thunderstorms have resulted in downed trees and quite a bit of damage to the roof, you’re not so sure “Trees” remains your favorite poem. Luckily, none of your neighbors homes is close enough to suffer damage from your trees.  Despite the issues, you haven’t changed your mind about spending your retirement years “in place”, and in fact have completed the first stages of making the house safer and more easily navigable. Fortunately, a part time consulting gig (as a couple, you do training seminars for fledgling entrepreneurs) has allowed you (this time) to cover not only the costs for the first stage of the remodel, but also that portion of the tree removal and roof repair expenses not covered by insurance. Going forward, however, you realize you’re going to need a long-range funding strategy for completion of the remodeling and for property care emergencies.

Since you’d already made the decision to “age in place”, think about using the equity you’ve built up in the home itself as the financial resource of choice for completion of the remodel and for down-the-road emergency funding related to tree removal/damage repair Since an FHA-insured reverse mortgage line of credit will require no monthly mortgage payments, you can “tap” the resource on an as-needed basis to fund the remaining stages of making your home “senior-friendly”. It will be reassuring to note that the unused portion of your line of credit till continue to grow at the same rate as the interest being charged on the borrowed funds.

You’ll be able to wander in your “woods”, knowing that you’re financially prepared for whatever “excitement” Mother Nature chooses to bring to the stage.

https://mutualreverse.com/david-garrison/