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#309: Using reverse mortgage income to finance flood protection

HOUSING WEALTH CAN HELP WATERPROOF A HOME 

Although your own beautiful, long-time home seems to have come through unscathed, all the stories about White River flooding, with so many Indiana homes being damaged, have made the two of you uneasy, to say the least. Retired now almost a decade, you have both been very pleased with your decision to age in place rather than relocate to a retirement community.  Having kept the house, itself and grounds in excellent repair, you felt “secure”. Now, truth be told, you’re worried that future weather disasters could cause greater risks to your well-being, not to mention greater financial burdens, than you’re prepared to handle.

Reading online about ways to help protect your property, you’ve decided to purchase a generator and hire workmen to install it on your upper floor. Even further, you’ve begun inquiries about sealing the basement walls and even replacing the flooring. Since the driveway slopes downward towards the garage, you are looking into a flood barrier of some kind. After reading one story about a sewer backing up into a home, you are considering have a check valve installed. Finally, years ago, your insurance agent advised that you were not in a flood zone, you’re looking into flood insurance coverage. 

You’ve always maintained a financial emergency fund, but these new costs, you’re realizing, are on a whole different level, and will dictate some changes to your carefully planned systematic withdrawals from your joint account and even retirement funds. Therefore, while you have taken pride in being debt free for decades, you feel it is urgent to borrow enough cash to finance these various weather protections for your home.

An alternate way to tap into your own housing wealth in order to weatherproof your home might prove a little less “unsettling” – rather than applying for a mortgage, apply for a reverse mortgage. With a HECM line of credit, not only are there never any required monthly mortgage payments,* you’ll have enormous flexibility in terms of the timing of any tax-free** withdrawals you make as you pay for each of the improvements. Meanwhile, the unused portion of your equity will be credited with growth at the same rate as that being charge on any borrowed amounts.

Your housing wealth can help you feel more comfortable in your home, while keeping unwanted water flow – out!   

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.

**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

Demystifying Reverse Mortgages

If you’ve ever thought “a reverse mortgage means the bank gets my house,” you’re not alone. It’s the number-one misconception I hear, and it keeps a lot of people from even looking into something that might help them. So let’s clear it up first: a reverse mortgage is just a mortgage. There’s a lien against your house, like any mortgage. The difference is you’re not making monthly mortgage payments.

There are two basic versions of a reverse mortgage, each with variations. The one used most frequently is the FHA-insured one — though proprietary products are gaining a lot of traction. It’s officially a Home Equity Conversion Mortgage, typically called a HECM (we pronounce it “heck-um”). The other is a proprietary reverse mortgage: not government-backed, created by a lender with its own rules. Most of the rules are the same as the HECM, but there are enough differences that sometimes the proprietary is the better choice — or the only way to get it done at all.

Fixed rate or adjustable rate

The HECM can be fixed or adjustable, and so can the proprietary. Like regular mortgages, the fixed rate is usually higher than the adjustable — and because of that higher rate, you start out with less money. The fixed rate is one lump sum, with a limit on how much you can take in the first year: 60 percent of the available funds. (There’s an exception — if your existing liens and closing costs need more than 60 percent to be paid off, you can go beyond it.)

The adjustable rate is more flexible, and you get more money. You can take funds three ways: a lump sum (with that same 60 percent first-year limit), monthly disbursements coming to you, or a line of credit you draw from as needed — or a combination of all three.

  • Why only 60 percent in the first year? Around 2008, borrowers could take every dollar on day one. Then the housing market crashed, and FHA — which insures these loans and collects a mortgage insurance premium on them — took heavy losses. Congress changed the rules to protect the program. That’s where the 60 percent limit comes from.

Any money you don’t take up front or as monthly payments sits in the line of credit — and that line of credit is unusual: it grows at the same interest rate we charge you on the money you’re actually using. It’s the adjustable-rate version that opens up the strategic moves we’ll talk about in the other posts: delaying Social Security to maximize it, delaying draws from retirement funds, and planning for long-term care.

What about the proprietary reverse mortgage?

The proprietary used to be called a jumbo — years ago you needed something like a $2 million home to make it work. That’s changed: these days, homes valued above $300,000 may qualify using MOOM’s Secure Equity product — we just changed some guidelines. Its advantages: there’s no FHA home-value cap — FHA runs its calculation off about a million two and change, while the proprietary uses the full value, so someone with an $8 million home gets the calculation on the full $8 million. The rules can also fit borrowers the HECM doesn’t allow — for example, qualifying at age 55 instead of 62 — the condo rules are looser [VIDEO], and there’s even a second-mortgage option that can sit behind a regular mortgage.

The trade-offs: since it isn’t FHA-insured, the interest rates are higher and the line-of-credit option isn’t as flexible — and there are other variations. That’s why, for every client, we run both side by side and see which one actually makes the most sense.

How is the amount determined?

Three things: the value of your home, the age of the youngest borrower (it’s designed to last both lifetimes), and current interest rates. Of the three, rates move the needle most — a quarter point in interest can mean roughly $10,000 in proceeds, where a year of age might mean $3,000.

And when does it come due? Like any mortgage: when you sell, when you move, or when the borrowers pass away. It really is just a mortgage — one that doesn’t ask you for a monthly payment.

About the author: Tom MacDonald has specialized in reverse mortgages since 2002, starting with Wells Fargo and now with Mutual of Omaha Mortgage in Reno, Nevada, serving clients in California and Nevada. He bought his own Reno home with a reverse mortgage in 2018 and made Mutual of Omaha’s nationwide President’s Club in 2022. NMLS #210661. (775) 234-2355.

IS IT WORTH EXPLORING A REVERSE MORTGAGE?

Reverse mortgages have gotten a bad reputation over the years. And many years ago, that reputation was deserved. But today, reverse mortgages have become one of the most regulated financial products out there, and several of the early abuses by lenders and loan officers have been curtailed significantly. Required independent counseling also helps ensure that senior borrowers fully understand how reverse mortgages work and the pros and the cons.

Still, for many, the stigma lingers. Even Dave Ramsey, who I’m sure many of you know, has YouTube videos demonizing reverse mortgages. Now I read Dave’s books starting in my late 20s, and Linda and I practiced a lot of his teachings on getting debt free. By our mid-30s, we were debt free (except for our mortgage), and at 41, we quit our corporate jobs, sold our house and all our stuff, bought a fifth wheel and a dually pick-up truck with funds left over from the home sale, and became full-time RVers for the next 15 years while being completely debt free.

Dave wouldn’t have approved of giving up our high-income-producing jobs and buying depreciating assets, but being debt free gave us the freedom to do a lot of extraordinary things in our lives at a reasonably early age. And, though we gave up our prime “earning years”, we came off the road with a bit more money than we started with by being frugal and responsible. And the experiences we had are worth far more than any amount of financial riches we may have given up. 

Now, I owe Dave a lot of gratitude, but he is not always on the cutting edge of things, and he is wrong about certain aspects of reverse mortgages today. I can link to over a dozen videos that explain why his thoughts on reverse mortgages are mis-guided. He is correct about some things, but he leaves out a lot of useful information, and he does tend to over-simplify many issues. 

I say all of that to say this. Too many people still today hear “reverse mortgage” and automatically dismiss their potential usefulness. Over and over, I see folks that could really use a full, professional evaluation get discouraged by friends and family members who don’t know all the facts and often don’t even know the circumstances of the person they are trying to “protect”. 

The vast majority of people don’t understand reverse mortgages, or they have incorrect pre-conceived notions. And I would bet 99% of people have absolutely no idea how flexible they can be, how customizable they are, and how many situations there are to which they can be applied. Heck, I didn’t know until I started digging into them for our own use.

I tell all my clients, “Let’s get everyone involved!” – family members, influential friends, and financial professionals. I want to engage with all the supporters and skeptics and answer their questions. At least then, the team can make an informed decision together.

Moving on. Let’s start this next section by saying reverse mortgages are not for everyone, but they can help a lot more people than are currently taking advantage of the options. Also, there is a reason they are only available for seniors who have a significant amount of equity in their homes. 

They are for those that have done pretty well in life as far as their net worth, but most of that net worth is often tied up in their homes and they could live better in their golden years by accessing that home equity. With that said, reverse mortgages can be used productively by a wide range of individuals that don’t appear to “need” them. That’s one of the big myths I’m trying to burst. Reverse mortgages are NOT JUST for those that are “desperate” or that “have no choice”. They can be quite worthwhile for those that already have great cash flow and/or other significant non-house assets to further improve their overall financial picture.

Let’s look at this list of situations where a reverse mortgage COULD be a very useful tool in retirement years:

1. Cash Flow & Everyday Living

Directly improving monthly flexibility, removing financial pressure, and enhancing day-to-day lifestyle.

• Eliminate Monthly Mortgage Payments:* Free up monthly income without needing to move.

• Supplement Retirement Income: Create a steady cash flow stream to comfortably cover daily expenses.

• Compensate for the “Widow/Widower Penalty”: Offset the sudden drop in household income (like Social Security or pensions) when a spouse passes away.

• Boost Emergency Preparedness: Set up a growing line of credit to sit unused until an unexpected need arises.

• Make Home Improvements: Fund renovations or upgrades to enjoy your living space more fully.

• Provide Stress Relief: Relieve the pressure on “house rich, cash flow tight” homeowners.

2. Wealth Preservation & Financial Strategy

Using home equity as a smart, defensive asset rather than a last resort.

• Protect and Preserve Investments: Draw from home equity during market downturns so portfolio investments have time to recover.

• Diversify Assets: Tap into illiquid home equity to balance out your overall wealth portfolio.

• Assist in Tax & Estate Planning: Strategically manage income brackets in retirement and optimize asset transfers.

3. Health, Security & Aging in Place 

Planning ahead for changing personal and medical needs without sacrificing independence.

• Age in Place: Fund home modifications (ramps, walk-in tubs, main-floor living) to stay in your home long-term.

• Plan Healthcare: Cover out-of-pocket medical bills, prescription costs, or in-home care support.

4. Family, Life Transitions & New Beginnings 

Navigating major family changes, milestone purchases, and legacy goals.

• Reverse for Purchase: Buy a new primary residence with no monthly mortgage payments while keeping more cash reserves.

• Help Family: Provide living inheritances, help grandchildren with college, or assist children with home down payments.

• Assist with Late-in-Life Divorce (“Silver Divorce”): Enable both parties to divide real estate assets and secure separate housing smoothly.

Some of those items may be more “needs based”, but most of them apply to such a wide range of seniors that I struggle to think of anyone that wouldn’t benefit from at least gaining a better understanding of reverse mortgages. Almost everyone I talk to that is interested enough to listen can think of someone they know that could be helped by a reverse mortgage in their retirement years.

As I proceed on this unplanned journey of reverse mortgage education, I hope to write blog posts with more details on each item in the list above, and I hope to become brave enough and competent enough to post some videos as well.

As always, thank you for reading.

Contact me to discuss. No Obligation, Just Education!!

Howard Payne

NMLS #2792928

(352) 840-3111

[email protected]

*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.

Howard Payne, NMLS ID 2792928. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Florida Mortgage Lender Servicer License MLD1827. Kentucky Mortgage Company License MC707287. North Carolina Mortgage Lender License L-186305. 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 #4582657663 Expires 10/2029

When Mortgage Rates Rise… Reverse Mortgages Play by Different Rules

Turn on the news today and you’ll hear plenty about mortgage rates, the 10-year Treasury, inflation, and what it all means for homebuyers. 

Most homeowners immediately think, “Higher rates mean higher monthly mortgage payments.”

That’s absolutely true for a traditional mortgage.

But reverse mortgages play by a completely different set of rules.

While both traditional mortgages and reverse mortgages are influenced by movements in the 10-year Treasury, they affect homeowners in very different ways. Understanding that distinction can help you make better decisions about your retirement rather than simply reacting to the latest headlines.

The 10-year Treasury has experienced significant swings over the past several years as investors have reacted to inflation, Federal Reserve policy, economic growth, and government borrowing. Those movements influence mortgage pricing throughout the lending industry.

When most people hear that mortgage rates are rising, they’re thinking about buying a home or refinancing an existing mortgage, where the interest rate directly affects the required monthly payment.

A reverse mortgage is fundamentally different. As long as the homeowner continues to meet the loan obligations, such as paying property taxes, homeowners insurance, and maintaining the home, there is no required monthly principal and interest payment.*

Because of that, the interest rate doesn’t affect monthly cash flow the way it does with a traditional mortgage. Instead, the expected interest rate primarily affects how much equity is available through the reverse mortgage and how the loan balance grows over time.

Imagine two homeowners. Homeowner A has a traditional mortgage. If rates fall by 1%, refinancing could reduce their required monthly mortgage payment* by hundreds of dollars. Homeowner B is considering a reverse mortgage. A lower expected rate may increase the available proceeds, but it doesn’t reduce a required monthly mortgage payment* because there isn’t one. They’re designed to address two completely different financial opportunities.

The more important question becomes: What role do you want your home to play in your retirement? Do you want it to create retirement income, eliminate financial stress, help you age in place, or preserve as much equity as possible for your heirs? There isn’t one right answer. Some homeowners want to preserve every dollar of equity. Others decide that using a portion of that equity to improve their quality of life today is worth the tradeoff.

The real decision isn’t where mortgage rates will be next month. The real decision is whether your home can help you accomplish the retirement goals that matter most to you.

*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.

Donald Battista, NMLS ID 2030959. 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 #4580236144

#308: Using reverse mortgage income to welcome foster grandchildren

HOUSING WEALTH HELPS “FOSTER” GRANDKIDS

When each of your son’s daughters was born, you opened a 529 account for them and you kept up the tradition of contributing $3,000 to each of those accounts as a birthday gift. The granddaughters are also named as beneficiaries in your trust documents.

Meanwhile, your daughter, who has never married, has recently become a foster parent to two brothers, one 6, the other 8, with the plan to possibly adopt them if they are unable to be returned to their natural parents. (It was explained to your daughter that, while the boys’ reunification with natural their parents remains a goal in every foster care situation, in this case that may not ending up a possibility.)

While the two of you had initially expressed strong reservations about your daughter’s decision, single and in her early 50s, to become a foster parent of two, you want to show that you support her choices every bit as much as you do your son’s, and would like to contribute to education accounts for these two new additions to the family. Later, should adoption become possible, you plan to rework your estate planning documents to include them.  

Importantly, you understand that, although there is compensation through the foster care system (and while your daughter has not asked for any extra financial help from you), her job’s position is not as secure as your son’s and daughter-in-law’s. Needless to say, the discussion led to an evaluation of your own financial situation. Now both in your late 70s and retired, you’ve been blessed with very few health problems. You were able to, without incurring debt, make some updates to your home to make it “aging-appropriate”. Still, with costs becoming more of a challenge for everyone, you want to be sure you’re not over-taxing your own resources. 

You might consider tapping into your own housing wealth by applying for a reverse mortgage. That way, rather than taking larger withdrawals out of your own investment and retirement accounts to provide financial help to your daughter while maintaining your own lifestyle. Since with a HECM line of credit, there are never required monthly mortgage payments,* you’ll have enormous flexibility in terms of the timing of any tax-free** withdrawals. Meanwhile, the unused portion of your equity will be credited with growth at the same rate as that being charge on any borrowed amounts.

As a point of information, under Indiana law, if you end up naming your foster grandsons in your will or trust documents, explicitly indentify them by full name (not in the general category of “grandchildren”), because foster children have no automatic legal right to inherit under state intestate succession rules).

Simply put, your housing wealth can help you “foster” your new grandsons and welcome them into the family!

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.

**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 

The Listing Opportunity Most Agents Are Missing: The Lifestyle Home Loan*

If you work with clients 62 and older, there’s a financing tool that can turn a stalled “maybe someday” move into a signed listing and a closed purchase. It’s called the Lifestyle Home Loan,* and most agents have never heard of it.

A top agent recently told us why she didn’t use it more: the program is hard to explain to older clients because it feels counterintuitive. That’s fair. So this post lays out, in plain terms, what it is, how the numbers work, and how to bring it up with the right clients.

What the Lifestyle Home Loan* is

The Lifestyle Home Loan is a Home Equity Conversion Mortgage (HECM) for Purchase: an FHA-insured reverse mortgage used to buy a new primary residence. It’s an alternative to paying all cash or taking on a traditional mortgage.

Here’s the part that feels counterintuitive. Your buyer makes a large down payment, usually from the sale of their current home. The loan covers the rest. And there are no required monthly mortgage payments** for as long as they live in the home and meet the loan terms.

The result: buyers can stretch their equity further, buy more home than their cash alone would cover, or keep a meaningful cash cushion after closing.

Why so many retirees stay put

Home buying in retirement is different from home buying while working. Plenty of older homeowners spend more time maintaining an outdated house than enjoying friends and family. They’d like a change, but two money worries hold them back:

  • “I don’t have enough cash to afford the price of a new home.”
  • “I can’t qualify for a traditional mortgage on a fixed income.”

The gap is real, especially with interest rates on a traditional mortgage in the 7s. When money is the obstacle, the listing never happens. Remove the obstacle, and you have a seller and a buyer in one client.

Two ways your clients can use it

  • Downsize: buy a smaller, less expensive home and keep more cash in the bank.
  • Right-size: buy a home that fits retirement better, such as single-story living, low maintenance, or a lifestyle community, even if it costs more than the current home.

Let’s do the math: Tom and Sarah

Tom and Sarah are both 70. They sell their home for $500,000, pay off a $50,000 mortgage, and walk away with $450,000 in cash. Here’s what that cash can do with the Lifestyle Home Loan:*


DownsizeRight-size
Price of new home$450,000$600,000
Loan amount$149,750$203,000
Down payment$300,250$397,000
Cash left after purchase$149,750$53,000

In the downsize scenario, they buy a home worth their full sale proceeds and still keep about $150,000 in the bank. In the right-size scenario, they buy a $600,000 home, $150,000 more than their cash alone would cover, and still keep $53,000.

Either way, they have no monthly mortgage payment.** And you’ve just closed two transactions with one client: the listing and the purchase.

Illustrative only. Actual figures vary with interest rates, borrower age and other factors, and assume closing costs are financed into the loan.

Quick reference: estimated down payment by age

Match the age of the youngest borrower with the purchase price to estimate the down payment. The older the borrower, the smaller the down payment.

Purchase priceAge 62Age 65Age 70Age 75Age 80Age 85
$400,000$291,200$282,800$268,000$256,000$237,600$211,600
$450,000$326,350$316,900$300,250$286,750$266,050$236,800
$500,000$361,500$351,000$332,500$317,500$294,500$262,000
$550,000$396,650$385,100$364,750$348,250$322,950$287,200
$600,000$431,800$419,200$397,000$379,000$351,400$312,400
$700,000$502,100$487,400$461,500$440,500$408,300$362,800
$800,000$572,400$555,600$526,000$502,000$465,200$413,200
$900,000$642,700$623,800$590,500$563,500$522,100$463,600
$1,000,000$713,000$692,000$655,000$625,000$579,000$514,000

Example shown is for illustrative purposes only. Actual down payment amounts may vary based on interest rate, borrower age and other factors. This range assumes closing costs will be financed into the loan. Closing costs include an up-front mortgage premium of the property value as well as other closing costs such as an origination fee, title insurance, appraisal fee, credit report fee and recording costs. Please check with your Lifestyle Home Loan Specialist for actual figures.

Why it matters for your business

  • More listings. Clients who’ve been “waiting until the numbers work” now have a path to sell.
  • More inventory in reach. Higher purchasing power means your buyers can consider homes they’d otherwise rule out.
  • Bigger transactions. A right-size buyer purchasing a $600,000 home instead of a $450,000 one raises the value of the sale, and your commission with it.
  • A real edge. Competing with discount brokers on fees is a race to the bottom. Bringing a solution most agents don’t know about sets you apart with the 55+ market.

That market is large and still growing. Boomers are retiring in record numbers, and many live in homes that no longer fit their plans. The agents who learn how to help them move are the ones who will lead it.

What your clients should know

Setting honest expectations builds trust and keeps deals on track. Make sure clients understand:

  • The youngest borrower must be at least 62.
  • The home must be their primary residence.
  • They must stay current on property taxes, homeowner’s insurance, home maintenance and any HOA fees.
  • “No monthly mortgage payment”** means no required payment. Interest accrues, and the loan balance grows over time. The loan is repaid when the home is sold or the last borrower permanently moves out.
  • Approval is subject to credit and financial assessment.

The best next step is a conversation with a specialist who can run actual numbers for your client.

Let’s talk about your next listing

*The Lifestyle Home Loan is a Home Equity Conversion Mortgage for Purchase.

**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. Connecticut Mortgage Lender License ML-1025894. Florida Mortgage Lender Servicer License MLD1827. Maine Supervised Lender License 1025894. Massachusetts Mortgage Broker and Lender License MC1025894. Licensed by the New Hampshire Banking Department, Mortgage Banker License 1025894MB. Licensed by the New Jersey Banking and Insurance Department.  New Jersey Residential Mortgage Lender License 1025894. Pennsylvania Mortgage Lender License 72932. Rhode Island Lender License 20163229LL. Rhode Island Loan Broker License 20163230LB. Virginia Mortgage Broker and Lender License, NMLS ID #1025894 (www.nmlsconsumeraccess.org). Subject to credit approval. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. For licensing information, go to:www.nmlsconsumeraccess.org #4533900893

Equal Housing Lender

What Has Waiting Ever Done for Us?

Why do we wait? We wait for the right time. We wait for things to get a little better. We wait until we feel completely certain. And sometimes waiting does make us feel better. Sometimes, looking back over a short period of time, we can even point to a small benefit and say, “See, waiting worked.” 

But I think there is a bigger question worth asking: What has waiting really done for us? Has it consistently put us in a better position, or has it sometimes cost us an opportunity we didn’t recognize until it was gone? 

I remember during the 2008-2009 financial crisis, I was watching Bank of America stock. I told myself I would buy it when it dropped below $2 a share. I waited. And waited. It never got there. I had identified an opportunity, but instead of acting on what was available, I focused on getting an even better opportunity. Looking back, had I bought when I originally wanted to, that investment could have funded my retirement completely. 

That’s the problem with waiting: we’re often measuring today’s opportunity against some hypothetical version of tomorrow that may never arrive. 

I see the same thing happening when people think about their home and the role their housing wealth could play in retirement. With a Reverse Mortgage, for example, an adjustable-rate option can provide access to a line of credit. And this is where the cost of waiting can be easy to overlook. People tend to focus on what they might gain by waiting – perhaps a better rate, a higher home value, or simply greater comfort with the decision – but they don’t always consider what they may be giving up during that same period. One of those things can be potential line-of-credit growth. 

I have a client I’ll speak about only in general terms who has been waiting for roughly three years. Based on the scenario we originally discussed and where that line of credit could potentially be today, that decision to wait may have meant giving up more than six figures of potential line-of-credit growth. That doesn’t mean everyone should act immediately. It means waiting has a cost too, and that cost deserves to be part of the conversation. 

Often underneath the waiting is fear. Fear of making the wrong decision. Fear of something we heard from a friend, read online, or experienced years ago. Fear deserves to be addressed, but it shouldn’t be allowed to make the decision for us. If I’ve done my job correctly, you should understand the information well enough that fear is no longer driving the conversation. And if you’re still afraid, then we’re not finished. We need to go back, identify exactly what that fear is based on, revisit the information, and make sure every question has been answered. The goal isn’t to convince you to do something today. The goal is to make sure that if you decide to wait, you’re waiting because the information supports that decision – not simply because waiting feels safer. Because sometimes the greatest risk isn’t making a decision.

Donald Battista, NMLS ID 2030959. 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 #4574443596

#307:  Using reverse mortgage income to reduce IRMAA

SHIFT THE INCOME SOURCE; INVITE “AUNT IRMAA” TO MOVE OUT

With each of you retired from long and successful careers in the world of business, you’ve been blessed to be able to enjoy a satisfying standard of living as a couple. Then, some five years ago, an inheritance you received proved more than sufficient to refurbish your home to make “aging in place in style” a reality. Meanwhile, your husband, by taking on some consulting work a couple of years ago, supplemented your income stream, allowing you both to continue postponing taking any withdrawals from any tax-deferred accounts.   

Much to your dismay, you realize (after reading endless online pieces on the subject and one tearful session with your tax advisor), 2027 might prove to be a “pay the piper” time for you from a tax standpoint. Not only must you (you are four years older than your husband, and have just turned 73) take your first (of course, taxable!) Required Minimum Distribution from your retirement account, you’ve just learned that your monthly premiums for Medicare are likely to triple in 2027. 

IRMAA, (Medicare Income-Related Monthly Adjustment Amount), is what you pay in addition to your Part B and Part D Medicare premiums. Since you’re a married couple filing jointly, you’re both going to be paying the surcharge. And, with 2025 having been such a great year for extra earnings, 2027 will be the year the Social Security Administration considers when calculating IRMAA. 

While there’s no avoiding taking RMD’s out of your own retirement accounts, your husband can continue deferring his Social Security benefits – and his Required Minimum Distributions.

Meanwhile, consider using your housing wealth as a “standby” income resource. With reverse mortgage proceeds classified as loan advances rather than as income, you will have a way to fund any needed or desired lifestyle needs without inviting “Aunt IRMAA” to be a permanent guest in your 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.org

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#306: Using a reverse mortgage to finance family travel

USING HOME TO MAKE AWAY-FROM-HOME MEMORIES ACROSS THE GENERATIONS

Still getting used to the retired life on which you embarked just three years ago, you’ve been discussing hosting periodic family vacations to include your two grown children, the grandkids, possibly even inviting both sets of in-laws. 

With both of you experienced in project management, this “making memories project” seems quite do-able in terms of making all the arrangements. You envision paying for everyone’s hotel, and excursions, plus footing the bill for one big welcome dinner for all. (Each family would have to cover the cost of their other meals.) 

You’ve begun to create a general budget plan for the first trip in early 2027 and are now in the process of discussing with your wealth advisor which investment accounts to tap for executing each stage of the five-day “event”. (Also to be discussed is taking out a home equity loan, then repaying that loan over the course of a year, then again tapping the equity for each yearly trip.)

You might consider tapping into your housing wealth in a different way, by applying for a HECM reverse mortgage. The big difference is that there will never be any required monthly mortgage payments,* affording you much greater flexibility in terms of timing your withdrawals as the plans for the family trip progress. Meanwhile, any unused portion of your equity will be credited with growth at the same rate as that being charged on the borrowed funds. 

As Travel Weekly by Northstar presents the concept, “Multi-generational family travel brings grandparents, parents, and children together to share new experiences, build core memories, and bridge generational gaps,”  

Sounds as if the two of you are on the bandwagon, using your home equity to make away-from-home memories to share with your young and young-at-heart family members.

*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