Offering Holistic Retirement Solutions
A Reverse Mortgage is just a tool in your client’s retirement tool belt. You need to be letting them know how you can provide them with a whole, holistic, retirement plan.
Things to know:
- The unused portion of a line of credit grows each year- whether the home’s value increases or not.
- If your client plans to remain in their home, this is a viable retirement funding strategy.
- This is tax free as a Reverse Mortgage is is essentially a loan payment, it is not a taxable event and won’t impact your taxable income or tax bracket.
- Your client can coordinate with with other retirement investments. They can strategically use the funds by coordinating the with their existing retirement investment portfolio. Balance their home asset against their other assets and only draw on reverse mortgage funds during a bare market. When their portfolio is doing fine, spend from there.
- Use reverse mortgage for one partner to stay in their home if the other partner needs assisted living care.
- If your client is struggling, they can downsize with a Reverse for Purchase and move without a principle or interest payment.
- Don’t look at Reverse Mortgage on it’s own, but as a piece of a larger retirement strategy. Your client’s home may very well be their greatest asset. Educate your retirement clients about the various ways to leverage this asset to help them maximize their income. For certain borrowers, a Reverse Mortgage may be a lucrative way to help them spend their golden years with dignity and financial security.
“Growing Pains” Created a Safer, Stronger, Product
Reverse Mortgages have become a stronger product after enduring years of program changes handed down by the Federal Housing Administration. Reverse Mortgages, including the Home Equity Conversion Mortgage (HECM) program, went through a lot of growing pains during their first 25 years.
Improvements made were:
- Only allows borrowers to tap into no greater than 60% of the lending limit in the first year
- Greater security of income and credit
- Required to complete a financial assessment
- Protections for non-borrowing spouses
