2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

January 25th, 2022

As a financial advisor, you’ve prided yourself on working in cooperation with your clients’ other advisors (CPA, estate planning attorney, business broker, realtor, insurance agent), even helping clients assemble those advisory teams. It is not unusual for you to host and even “emcee” such advisory team meetings for different clients.

Up until recently, reverse mortgages have not been under discussion at any of these team meetings. For one, your clients have mostly been too young to qualify for reverse mortgage funding. Now that several have introduced their parents to your practice, the topic of housing assets as part of wealth planning has become more relevant, with questions arising about the pros and cons of different types of reverse mortgages.

While there are ways to use a reverse mortgage to help clients achieve a variety of financial goals, one signal that this topic should be included in the “agenda” is clients expressing a strong desire to “age in place”. Since reverse mortgage debt does not need to be repaid until the owners sell, move, or die, clients can plan to spend their retirement years in familiar surroundings.

Since you are the financial advisor on the “team”, the one aspect of a Home Equity Conversion Mortgage most relevant to the services you provide your clients is the financial flexibility they will have to preserve and grow their investment assets. After all, your biggest challenge as a financial advisor consists of helping retirees maintain their desired standard of living without depleting their assets. But, as you’re all too aware, significant market losses in the early years of retirement can dramatically shorten the longevity of a portfolio.

When draws from a reverse mortgage line of credit are substituted for portfolio draws in years following investment market downturns, the longevity of the clients’ investment assets can be restored and even enhanced.

Housing wealth can enable a long term wealth management strategy..

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

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

January 24th, 2022

You never thought this would happen, but in your late sixties, the two of you are being given a second chance to practice your parenting skills. Your daughter, a widow, is a traveling healthcare “auditor” and is out of town a good portion of the time. In order to help supervise the two teen children, you decided last year to let all three of them move in with you. As retired educators, the two of you are well-positioned to supervise the grandkid’s studies (including remote learning when necessary), and to chauffeur them to their various activities (neither is yet of driving age). Your daughter has the peace of mind of knowing her kids are well taken care of during her absences.

Fortunately, five years ago you did an extensive remodel of your home, creating a ground floor master bedroom and bath, but still maintaining three upstairs rooms. Your plan was to “age in place”; now you’re “parenting in place”! From a financial standpoint, nothing has really  changed for you, as your daughter is well able to support her own expenses and those of the children; in fact, she has insisted on contributing to the monthly household expenses.

Within the next five to six years, both of the grandchildren will be entering college, and you would like to find a way to help fund those costs. You had used a home equity line of credit to fund the big remodel, and have that loan almost two thirds repaid. Since mandatory withdrawals from your retirement plans will need to start just about when the older grandchild is going to need tuition help, you’re hoping to be able to at least make a dent in the college costs.

As an alternate approach to your situation, consider using your own housing wealth to help with the grandchildren’s education costs. Since your plan always was to remain in your home, a reverse mortgage line of credit can provide the source of funds to help pay college expenses for the grandchildren precisely when most needed. Since reverse mortgage payments are considered loan proceeds rather than income, they are not taxable. You can choose to make each withdrawal precisely when each grandchild is faced with a specific and immediate college expense.

Your housing wealth can help you help those grandkids!

https://mutualreverse.com/david-garrison

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

January 13th, 2022

In the year or so leading up to your retirement earlier this year, you put a lot of thought into planning for both best and worst case scenarios. By and large, you’re satisfied that you’ve made very viable investment and retirement funding decisions. You’re pleased with the remodeling work you had done on your home, including a new roof, heating/AC system, a kitchen update, and a greenhouse for your orchid-raising pastime.

Perhaps most important, you’ve reviewed and updated your estate planning documents and insurance plans. In the course discussing those things, you’ve reached firm agreement on one topic: aging in place. Should ill health be your lot at some point in the future, you both agree, you want to do everything possible to remain in your own home. You believe you would be able to afford hiring help to maintain your property.

Should ongoing medical care become necessary later on, you would opt for at-home nursing care you’ve decided. You’ve done some basic research, and learned that home care can actually be less expensive than assisted living or nursing home care, particularly since your home is paid for. In addition, there are two of you, and you could help each other with everyday needs.

While you’ve certainly done some very comprehensive planning as you move into retirement, it would be smart to set up a contingency plan should the dollars needed to cover at-home nursing care be greater than anticipated. Using the equity in your home, a reverse mortgage loan would provide an if-needed source of funds to pay for whatever in-home medical care might be needed down the road.

Using housing wealth could help you keep your healthcare at home!

https://mutualreverse.com/david-garrison

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

January 11th, 2022

In accordance with this way of thinking, pre-pandemic, you splurged on a number of luxury cruises and travel adventures. While there are still a number of things you’d like to enjoy, you’ve now become conscious of the danger of outliving your assets. “Longevity risk” was always a factor in your financial planning (both sets of your parent are in their nineties), and recently, you transferred some of your investment dollars into annuities with lifetime payout guarantees

The recent jump in everyday costs of living has given you pause. As just one example, even though your home is paid for and has appreciated in value, the costs of heating and cooling have risen substantially, not to mention food costs. You’re looking for more ways to protect yourselves against asset depletion without reducing your lifestyle.

Consider arranging for housing wealth to serve as your “back-loading” plan for combating longevity risk. By arranging for a reverse mortgage loan on your home, you will be creating a line of credit to be held in reserve for later retirement needs. Of course, you’ll continue to own the home and will still need to pay for heating and cooling, repairs, and taxes. Meanwhile, the equity you’ve built in the home can be tapped for needs later in your retirement.

https://mutualreverse.com/david-garrison

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

January 1st, 2022

At age 65, you’re almost one full year into what you call “3/4 retirement”, having quit full- time employment at the end of February, 2021. So far, so good; with your planned monthly withdrawals and a couple of tutoring gigs, you’ve been easily able to cover all your lifestyle needs. However, you’re concerned about continuing this level of portfolio withdrawals if there are sharp dips in the stock market over the next year or so. Because you will have paid off your home by this summer, there will be one less monthly expense you need to worry about. You’ve estimated that you could cut expenses by one fourth at the most, but are hoping that won’t be necessary.

When managing your retirement budget, consider all your assets, not only your investment portfolio. Your housing wealth can act as a buffer when volatility appears to threaten the stability of your portfolio assets. If, as you fear, the stock market were to experience losses during the coming year, you could draw from your reverse mortgage line of credit until the market stabilizes. Because the proceeds from your reverse mortgage credit are not considered income for tax purposes, it’s possible that you would need to take out smaller amounts than you now receive from your portfolio withdrawals.

It sounds as if you’ve done some careful planning, but, like many retirees, are very concerned with stabilizing your income flow in the face of market fluctuations and maintaining purchasing power over the years. A reverse mortgage line of credit might provide a useful “backup plan”, with home equity serving to “buffer” the inevitable ups and downs of the market.

https://mutualreverse.com/david-garrison

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

December 21st, 2021

Although your original plan had been to take on consulting gigs after retirement (planned for the end of next year), the two of you have recently become interested in owning and operating a franchise business together. You’ve been exploring businesses in fields very different from those of your present employers, more in line with your hobbies rather than your experience. Nevertheless, you’re confident that your decades of successful work (in marketing and customer service, respectively) will lead to success, particularly since you plan to get involved with only a successful national brand business.

While you have been “stockpiling” cash reserves to cover the initial franchise purchase price, much of your other invested assets is in tax-deferred retirement plans. You want those portfolio(s) to remain in place, generating quarterly and monthly income until you begin to generate reliable income from the new business. A mortgage refinance is among the tactics you’re considering (the existing first mortgage is one year from being fully paid).

Acquisition financing is one of the challenges for people contemplating becoming franchisees, and it sounds as if you have that part covered. In fact, franchisors are looking for people to support themselves until their new business “clicks”. Rather than taking out a second mortgage on your home, consider tapping into the equity you’ve already built up by applying for a reverse mortgage. You’d continue to own and live in your home, but you’d have a source of tax-free funds which you could use as needed, avoiding the need to sell off portfolio assets. Once the mortgage is in place, that asset “reservoir” is sure to be a positive in the eyes of a potential franchisor.

As you “back away” from your lives as employees and begin your new lives as business owners, your reverse mortgage will cushion your foray into franchising.

https://mutualreverse.com/david-garrison

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

Seven years ago, after arriving at two important decisions (retire from full-time employment and remain in your home), you took out a reverse mortgage. At the time, you used part of the loan proceeds to remodel the home to for safety and mobility needs, but have not needed to make withdrawals from your Line of Credit since then.

Meanwhile, you cannot not help but notice the significant appreciation in home values, as neighbors of yours have been selling their homes for tens of thousands more than they might ever have expected. Although your decision to stay put has not changed, you would like to find a way to take advantage of the increase in value of your home and also of the fact that interest rates today are lower than they were back then.

You are correct in that two factors have come into play since you took out your Home Equity Conversion Mortgage (HECM) seven years ago – lower interest rates and appreciation in home values. A HECM-to-HECM refinance might help you take advantage of both those developments. Depending on a new appraisal of the home, the combination of reduced interest rates and appreciation in the value of the home could mean a significant increase in the Line of Credit available tax-free if and when you decide to use it. 

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

https://mutualreverse.com/david-garrison

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

Effective anti-torpedo defense depends on early detection of the torpedo. … Once the torpedo is launched, sonar tracking from ships and helicopters may manage to spot it in time to destroy it with anti- torpedo torpedoes or by maneuvering the ship away from any visible torpedo track.https://navalpost.com/how-modern-warship-defend-themselves-against-torpedo/#:~:text=The%20effective%20anti%2Dtorpedo%20defense,early%20detection%20of%20the%20torpedo.&text=Once%20the%20torpedo%20is%20launched,from%20any%20visible%20torpedo%20track.

As financial advisor, a primary concern of yours is helping clients manage, protect, and grow their assets. For those at the brink of, or even already into retirement, one important decision involves the timing of social security benefits. Wade Pfau (December 1, 2021 issue of Financial Advisor) aptly described the situation as the Social Security Tax Torpedo, referring to the fact that up to 85% of Social Security benefits can be counted as taxable income. For clients with the means to generate sufficient retirement income while deferring Social Security benefits, the torpedo “hit” can be successfully deferred, and, as you explain to clients, the benefits will be increased for every month of delay beyond their “full retirement age”. https://www.fa-mag.com/news/avoiding-the-social-security-tax-torpedo-65046.html?section=43&utm_source=FA+Subscribers&utm_campaign=767126201a-FAN_Top_Stories_PNCBank_120421&utm_medium=email&utm_term=0_6bebc79291-767126201a-222509733 https://www.ssa.gov/benefits/retirement/planner/1943-delay.html

Unlike most of your clients who are following your advice to deter Social Security benefits, Ron and Sue are not willing to defer (nor, given their overall health and financial situation would that be advisable). They will be retiring in June 2022, and, while Ron will have some pension income, the rest of this couple’s income needs will need to be satisfied out of the combination of invested assets and Social Security. Fortunately, Ron and Sue have little to no debt, and their home is in very good repair and almost fully paid for.

The results of a study conducted by the Center for Financial Security sounds as if it was patterned after “Ron” and “Sue”. “Our findings highlight the critical role of housing wealth for the economic security of SSA beneficiaries and the use of mortgage borrowing as a vehicle to smooth consumption following a health shock.” Consider recommending to your clients that they use their housing wealth to generate tax-free income in the form of a reverse mortgage, or a HECM (Home Equity Conversion Mortgage.)

https://cfsrdrc.wisc.edu/publications/research-brief/wi20-11

As Charles Rawl, CFP®, RICP® wrote in Kiplinger, “This is no time to be stuck in conventional wisdom paradigms… The intelligent use of a reverse mortgage, particularly a federally insured HECM line of credit, could extend an individual’s or couple’s retirement resources in a way that more traditional strategies cannot.” 

https://www.kiplinger.com/article/real-estate/t037-c032-s014-a-tax-free-income-source-for-retirees-to-consider.html

https://mutualreverse.com/david-garrison

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

At age 66, now three years into living on your own following your spouse’s passing, you’ve decided that the time has come to sell your home. You’ll be moving to a small town near Evansville, where your daughter and her family live. While the original plan was to wait until spring, when the warmer weather would make packing and moving easier, your daughter has found the perfect home in the perfect location, so you’re beginning the process of listing your
present home for sale. The house in question belongs to acquaintances of your daughter and son-in-law, and is not yet listed, but will be selling for far less than the money you expect to realize from the sale of your own home (both because it is smaller and because it’s not in an urban neighborhood).

You want to act swiftly to make an offer on the home the moment it is put on the market, but are not sure about the financing, or if the timing of the sale of your home will dovetail with when this other home goes on sale. The mortgage on your current home was paid off with your husband’s life insurance proceed, and you would like to avoid mortgage payments in the future.

A reverse mortgage could be your answer. Since you intend to make your new home the primary residence, you can apply for a Home Equity Conversion Mortgage for Purchase (HECM). At the time of closing on your new home, you’ll need cash to pay the difference (approximately half the home’s value) between the HECM and the sales price (plus closing costs), but it sounds as if the sale of your own home will cover that and then some.

Most important, you will not be obligated to make any monthly payments on the HECM for Purchase loan. As far as timing, whether the sale of your present home happens precisely in tandem with the closing on the new home, or a month or two earlier or later, starting the process now can allow time for the HECM to be approved. Then, with all the financial arrangements lined up, you’ll be ready to make your move to southern Indiana suburbia.

“Shifting into reverse” can help you move “forward” with your plans! 

https://mutualreverse.com/david-garrison