Financial Advisors are starting to understand what a powerful tool a Reverse Mortgage can be for their clients. Especially when used as part of a broader financial plan.
With new studies out from researches at Texas Tech and an report published in the Journal of Financial Planning it is becoming more clear that drawing upon a Reverse Mortgage up front before securities portfolios are depleted can make traditional retirement accounts last much longer than waiting to get a Reverse Mortgage as a last resort. For many retirees it’s not a matter of if they’re going to run out of money, it’s a question of when.
The main objective is to maintain cash flow throughout their golden years and avoid completely running out of money in their later years. A Reverse Mortgage in early retirement years goes against traditional thinking but that thinking is quickly starting to change. More and more retirees are considering a Reverse Mortgage at an earlier age.
Reverse Mortgages are available to homeowners age 62 and above. The federal government insures nearly all reverse mortgages through its Home Equity Conversion Mortgage (HECM) program. People can access the equity in their homes and receive regular monthly payments, a line of credit, or a lump-sum payment. Borrowers are no longer required to make a monthly mortgage payment which adds to monthly cash flow and eliminates the need to draw from retirement accounts to make a mortgage payment.
This strategy allows retirement accounts to continue to gain momentum in the early years when investment performance is often weak or negative. By drawing proceeds from a Reverse Mortgage in the early years instead of retirement accounts, the investment portfolio has time to grow. Once the homeowners have spent down the equity in their home they are still entitled to live in it as long as they wish without making monthly mortgage payments.
The added benefit is that their retirement accounts have had a much longer time to grow and they not only have remaining retirement funds, they have the extra monthly cash flow that would normally go toward a mortgage. Now is the time for Financial Planners to start learning about the benefits of combining a reverse mortgage and long term planning strategies for their clients.
So many planners have clients with frozen or canceled Home Equity Lines of Credit (HELOCs). A HECM Reverse Mortgage line of credit actually grows over time and doesn’t require a monthly payment (The unused portion). Lump-sum payments are also becoming increasingly more popular and the funds can be used to enhance the client’s current portfolio. It is simply a matter of introducing Financial Advisors to a new tool to help their clients reach their retirement goals.
A Reverse Mortgage Banker can work with you and your clients to determine if a reverse mortgage is a good option for them and whether your client should choose an adjustable or fixed rate reverse mortgage. We are actual bankers and we do not offer other financial products outside of mortgages. Financial Advisors never have to worry about us, our bank or affiliated companies trying to compete with them.
For more information contact one of our Reverse Mortgage Bankers today: http://www.TheReverseMortgageBankers.com/