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Tag Archives: Boomers

Financial Times: Reverse Mortgages Can Be Lifesavers


March 5th, 2014  |  by Jason Oliva Published in News, Retirement, Reverse Mortgage

The financial planning community is warming up to reverse mortgages, with some advisors finding them to be “lifesavers” for some clients in tight circumstances, a Financial Times article suggests.

As reverse mortgages overcome historically negative perceptions with the help of recent program changes and new consumer protections, Home Equity Conversion Mortgages (HECMs) have also begun to gain more recognition from financial advisors in mainstream retirement planning.

Dana Anspach of Scottsdale, Arizona-based Sensible Money told Financial Times she recently recommended a reverse mortgage to a widow in her 80s whose home was paid off and was supplementing her Social Security with a home equity line of credit.

“Anspach used a reverse mortgage to pay off the HELOC, wiping out $400 a month in interest payments and providing additional monthly income of $200,” the article notes.

Other advisors are recognizing that the tax-free proceeds from reverse mortgages can allow clients to postpone Social Security usage as part of a “post-retirement tax saving strategy,” which can keep clients from withdrawing too much from IRA or 401(k) accounts.

“The bottom line is that reverse mortgages are not longer only for retirees in dire straits. Advisors ‘should be looking at every aspect of income, including home equity,’” said CEO of Blue Ocean Global Wealth Marguerita Cheng in the article.

Read the Financial Times article

Written by Jason Oliva

 

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INFORMATION FOR ADULT CHILDREN OF AGING PARENTS

Following is some helpful information when you are considering an FHA HECM for your parents:

House-safe• More Americans fear running out of money in retirement than fear death. With increasing life expectancy, it is easy to understand this fear. Increasingly, long-term retirement planning includes a reverse mortgage as a means to increase cash flow and address income shortfalls in retirement. Nearly one quarter of homeowners say long-term financial planning was their reason for originating their HECM.

• Nearly half of homeowners considering a reverse mortgage are under age 70.

• About two-thirds of HECM borrowers want to extinguish monthly mortgage payments to make more money available for daily needs. Another way of saying this is that most homeowners have a traditional mortgage – which is paid in full when they close on their reverse mortgage.

• The percentage of workers aged 55 or older who are still employed is up to 40%. However, staying in the workforce can become increasingly difficult as people get older.  Proceeds from the HECM may provide provide tax-free funds and may allow older homeowners to retire

 

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Need Home Modifications To Age In Place? A Reverse Mortgage May Help

Most seniors want to stay in their homes and remain independent yet often believe they can’t for a number of reasons.  Making some home modifications could make their wish of remaining in their home a reality by providing a safer more comfortable environment.

More than one third of those age 65 and older suffer injuries from a fall each year according to research from the National Center for Injury Control and Prevention.  AARP research suggests the leading cause of injury and deaths among seniors is falls.  Modifying one’s home can help to eliminate common hazards and help to improve the quality of living in one’s home.  Improving the safety of one’s home can help one have more comfort, convenience, and  remain independent and active in their community.  Some people have mobility limitations from causes other than falls and still want to stay in their home.  This too can be accomplished with some home modifications.Home modifications can help seniors remain in home

Bathing, toileting, cooking, and climbing stairs can be made easier to perform by adapting one’s home.  Modifying one’s home can be as simple as installing grab bars in the bathrooms, removing throw rugs, moving electrical cords from hazardous locations, touch buttons for turning lights on and off to installing entrances to accommodate wheel chairs and lifts to access another level.

By assessing and modifying one’s home, one can live more safely, comfortably and remain independent.  But how can one afford this?  A reverse mortgage may be the solution beyond what Medicare or insurance will pay for.

A reverse mortgage is a special loan to allow seniors to remain in their home with security, independence, dignity, and control by converting the equity into cash.  Similar to a conventional loan where a lien is placed on the home yet the borrower retains ownership.  The reverse mortgage is different from a conventional loan with no income or credit scores required and no monthly mortgage payment requirements.

The reverse mortgage loan amount is based on the age of the borrower, their home value and an Expected Interest Rate.  Due and payable when the home is no longer the primary residence, usually when they move, die or sell, a reverse mortgage can allow one to remain in their home and use the equity now.  As a non-recourse loan there is no personal liability to the borrower or their estate as long as they are not retaining ownership.  If the home is sold for more than the loan balance then the borrower(s) or their heirs keep the difference.Reverse Mortgage Helped Bob Modify His Home

Bob, a Minnesota senior who had lost his wife wanted to stay in his home.  He did the reverse mortgage and with a portion of his proceeds he modified his home to be prepared for the future such as having the doorways wider to accommodate a wheel chair and grab bars installed.  He’s thrilled that he was able to have his home modified and will be able to remain there for years to come.

 
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Posted by on September 14, 2010 in Uncategorized

 

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