(Inspired by, Reverse Isn’t ‘the loan of last resort’ Anymore, by Ryan Smith, Mortgage Professionals of America, 9/24/14.)
In the past, consumers often viewed a Reverse Mortgage as a last-ditch effort to meet living expenses. And very often, that view was reinforced by the lender they were talking to! But that’s all changing as financially savvy Baby Boomers become eligible for Reverse Mortgage loans.
Since the 1990’s, Reverse Mortgages were simply advertised as a last-resort solution for financially strapped seniors who couldn’t make ends meet. And even today, there are dozens of misconceptions that many seniors still have about Reverse Mortgages. (For example, many believe “the bank will own my home.” This is NOT true.) However, Baby-Boomers are starting to view Reverse Mortgage as an opportunity to build wealth rather than as a last-ditch lifeline.
Years ago, borrowers pulled out as much money as they could up-front to cover their living expenses. Now, more and more borrowers are using Reverse Mortgages as a financial planning tool.
According to Steven Resch, Vice President of wholesale lending for Generation Mortgage, “We’re seeing younger Baby Boomers coming into the marketplace saying, ‘I’m going to work until I’m 70.’ A lot of them still have mortgages on their homes. So we’re saying, go take your current mortgage balance and convert it to a Reverse Mortgage and continue making payments on it. Then you’ve started a line of credit at age 62 that by age 75 is probably going to be double what it would have been.”
Baby Boomers often have a financial advisor with whom they’ve had a long-term relationship. They’re used to utilizing long-term strategies to accomplish their financial goals. A Reverse Mortgage can be used to enhance wealth, fund life insurance or trusts, and/or free up cash flow for other purposes. These are concepts and strategies that are becoming more commonly utilized.
If you’re unfamiliar with Reverse Mortgages, wish to learn the truth about how they work, or wondering whether a Reverse Mortgage is right for you, feel free to contact me. If you’re curious about implementing a Reverse Mortgage into your financial plan, I’d be happy to have an exploratory conversation with your financial advisor.
Warren Goldberg is President of Mortgage Wealth Advisors, a Certified Mortgage Planning Specialist®, and a published author. His interviews include Blog-Talk Radio, Newsday, and the Long Island Herald. Since 1992, he’s been sharing his financial knowledge and wealth-building strategies, including how to properly use your mortgage as a financial tool. His clients regularly express their trust and appreciation by recommending friends and family call when in need of mortgage, real estate, and financial guidance.
This material is not from HUD or FHA,
and has not been approved by HUD or a government agency.