How It’s Used

There are perhaps as many reasons to do a reverse mortgage as there are senior homeowners. For seniors from all walks of life, the reverse mortgage is a life-changing event. Clients, their families, and their financial advisors tell us that by eliminating concerns about their finances they achieved incredible peace of mind.

Some Common Uses for a Reverse Mortgage:

  • Eliminate a current mortgage and its payments
  • Create additional monthly tax-free income
  • Save home from foreclosure
  • Pay off high-interest debt
  • Pay for home repairs and property taxes
  • Fund in-home health care
  • Provide a living legacy to children and grandchildren to help purchase a home, go to college, or provide annual tax-free gifts
  • Purchase a home more suited to senior living
  • Purchase an RV, a vacation home, or travel

The Conversation among Professionals about the Benefits of a Reverse Mortgage Has Changed

Many financial planners, money managers, and legal professionals have traditionally been reluctant to advise their clients on the use of reverse mortgages. More recently, however, research conducted by such organizations as The Center for Retirement Research at Boston College, The Finance Department of Texas Tech University, and researchers Ph.D. and tax attorney Barry Sacks, and his brother, Ph.D. and economist Stephen Sacks, has revealed interesting applications for the use of a reverse mortgage in retirement planning. Perhaps the most compelling benefit was the Texas Tech research that demonstrated how a reverse mortgage can increase the likelihood of lifetime cash flow from 55% to 90%.

Other Ways in Which a Reverse Mortgage Can Be Used:

Quality of Life

  • Provides a “stay-in-home” option
  • Maintains control and independence
  • Eliminates fear of losing home
Cash flow

  • Converts an illiquid asset into cash flow
  • Provides extra cash for daily living
  • Helps retire and avoid high cost consumer debt
Protection

  • Mitigates spend down risk
  • Protects the home / estate
  • Manages longevity risk
Asset Allocation

  • Preserves other assets in portfolio
  • Lessens impact of more volatile assets
  • Mitigates tax consequences
  • Asset equalization in a divorce

Reverse Mortgage Resources for Professionals:

If you are a financial, banking, real estate, or legal professional, we encourage you to visit the Reverse Mortgage FocusĀ® website for more information on how an FHA-insured reverse mortgage might provide a benefit to your client.

Visit the Reverse Mortgage Focus site

Comments are closed.