Why Financial Advisors are Reconsidering Reverse Mortgages

A reverse mortgage could help your clients age 62 and older to effectively leverage an important retirement asset: home equity. Thanks to recent academic research that demonstrates the value of FHA-insured* Home Equity Conversion Mortgages (HECMs), reverse mortgages are gaining acceptance as a valuable and effective tool to help satisfy the challenges of meeting retirement goals for decades.

Design Solutions for Your Clients

With its flexible payment options, a reverse mortgage can give borrowers more financial control and can serve as an excellent risk management tool, while keeping productive assets under your management — helping their portfolios last longer. As a tax-efficient strategy, clients can use a reverse mortgage to reduce their income taxes1 by lowering their withdrawals from qualified accounts. Other uses include refinancing aconventional mortgage with a HECM, so as to eliminate a client's monthly principal and interest payment. As with any home-secured loan, the borrower must meet their loan obligations, keeping current with property taxes, insurance, maintenance, and any homeowners association fees. Or perhaps using a HECM to finance the purchase of a home, thereby reducing the amount of cash older clients have to "put down" when downsizing.

HECM Credit Line: A Unique Safety Net Offering a Growth Feature and Flexible Repayment

Clients can establish a HECM credit line and draw on it as needed for future expenses, such as health care costs. A unique feature of the HECM credit line is the amount available to clients will grow2 monthly, independent of any change in home value. This feature provides additional available cash in future years that may prove valuable as clients savings are depleted.

Unused Line of Credit Growth

The information being shown is for illustrative purposes only.

To see the pros and cons of a Reverse Mortgage Line of Credit vs. a traditional Home Equity Line of Credit (HELOC), click here.

Call me today and see why HECMs are a loan for life.

Allan Berger
HECM Loan Specialist, NMLS #1192726
Call 832-360-6700

Not tax advice. Consult a tax professional.
If part of your loan is held in a line of credit upon which you may draw, then the unused portion of the line of credit will grow in size each month. The growth rate is equal to the sum of the interest rate plus the annual mortgage insurance premium rate being charged on your loan.
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The reverse mortgage option should be viewed as a method for responsible retirees to create liquidity from an otherwise illiquid asset, which in turn can create new options that potentially support a more efficient retirement income strategy, such as more spending and/or more legacy.
— Wade D. Pfau, Ph.D., CFA, “The New Case for Reverse Mortgages,” The Wall Street Journal
I welcome your questions.
Feel free to call 832-360-6700, or send me your questions by email using the form below.

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