For many years after the Deering Savings & Loan first issued a reverse mortgage to Nellie Young of Portland, Maine in 1961, CPA Joshua Wiesenfeld writes, the product was viewed with suspicion by CPAs and financial planners. Over the years, that view became outdated, he adds, with the Financial Industry Regulatory Authority softening its stance after reviewing research published in the Journal of Financial Planning in 2012 demonstrating that, used wisely, the reverse mortgage can serve as an effective personal financial planning tool.
Now, twelve years after that article was published, a study by WSFS Mortgage shows reverse mortgages are being viewed favorably by homeowners aged 60 and over, who see them as a way to remain in their homes for a longer duration and as a method to enhance cash flow during retirement.
IRA expert Ed Slott has become a “convert” as well, suggesting on a Don Graves podcast that reverse mortgages can be a source of tax-free* income “you can count on for the rest of your life”, and that reverse mortgages can help pay the tax on Roth IRA conversions.
“Altogether, while reverse mortgages might not be top-of-mind for financial advisors working with wealthy retirees they could serve a role in mitigating against sequence of return risk, particularly for clients largely reliant on an investment portfolio to support their needs in retirement,” Emile Hallez writes in Investment News.
In my own reverse mortgage origination practice, I have several referral advisors who evaluate every client for potential reverse mortgage viability, understanding what a valuable tool reverse mortgages can be. As 2024 draws to a close, noting that interest rates have remained stubbornly high (potentially dampening the value of reverse mortgage funds), I am happy to note that the maximum loan value has been increased from $1,149,000 to $1,210,000, so that higher value homeowners can benefit.
As we bid farewell to 2024, I am committed to helping others understand how a reverse mortgage can fit into their retirement planning, providing security, peace of mind, and the opportunity to live a more fulfilling life.
Happy new year!
*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.orgEqual Housing Lender