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#163: Debunking reverse mortgage myths


As a financial advisor, you’ve tried to steer clear of extremes, believing that your clients’ retirement and tax planning should be centered around the preservation of assets with sufficient growth to outpace inflation. Particularly in recent years, you’ve focused on helping your clients avoid scams and “get-rich-quick” schemes.

Because your clients tend to be in the above-average net worth category, you have never felt the need to include reverse mortgages in your discussions of retirement planning. Although you read in the Journal of Accountancy that “practitioners should be prepared to discuss the advantages and disadvantages of reverse mortgages, you perceive that your more elderly clients have limited ability to comprehend the complexities of such a transaction involving their most treasured asset.

“Reverse mortgages are a scam,” Jamie Hopkins of Carson Coaching hears this all too often, he says, not only from consumers, but even sometimes from financial advisors like you.  In fact, however, HECM (Home Equity Conversion Mortgages) represent one of the most highly regulated and secure financial products out there, backed by the Federal Housing Authority.

 But, just as is true of all products, Hopkins reminds viewers, reverse mortgages in and of themselves are neither good nor evil. They must be used as part of a plan. In fact, using reverse mortgages strategically – and early in retirement, he emphasizes – can prove a very smart strategy.

If your home is just an asset, Amy Fontinelle writes in Investopedia agrees (as opposed to one that’s been in the family for decades or generations), “leveraging it for a more comfortable retirement might be the best way to use it. And, as Jamie P. Hopkins of Carson Coaching so cogently expresses the concept, for advisors and their retiree clients alike, it’s time to think of housing wealth as a line of first resort.

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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