Reverse mortgages have long suffered from a negative public perception which has been difficult to dispel. In truth, reverse mortgages are a reputable product and viable instrument for many seniors! Yet this negative perception of reverse mortgages remain, largely due to widespread public ignorance, unethical lenders and loan originators who misused the product, and seniors who acted irresponsibly by blowing through their equity without leaving anything for their living expenses.
A reverse mortgage is a financial instrument that quite simply allows senior citizens to convert equity in their home to spendable dollars. But the details of how a reverse mortgage works are as complicated as the different options available. (Many people still believe the bank will own the borrower’s home. This is NOT true!)
Like virtually every other financial instrument, when used incorrectly, they can squander the owner’s financial resources. We’ve seen this happen whether that instrument is a mortgage, investment, or insurance product. However, when used correctly these instruments can be a life saver! Statistics indicate many seniors will need to utilize their home equity to support their retirement. For these older Americans, there is no other product that affordably allows them to access this equity in their home.
In recent years, both senior advocates and financial professionals have been endorsing the use of senior citizens’ accumulated home equity as part of one’s overall retirement plan. Estate planning and senior care attorneys are promoting the strategic use of reverse mortgages as an estate-planning tool. Even news outlets including The Wall Street Journal, USA Today, The Boston Globe, and Forbes have written articles explaining how a reverse mortgage can be used in conjunction with other strategies to enhance one’s retirement plan.
However, in order to confirm whether a reverse mortgage is right for you,
in order to ensure a reverse mortgage is used correctly,
in order to ensure the reverse mortgage is complementing your financial plan,
helping you to preserve your wealth, and sustain your retirement,
you MUST utilize competent and qualified financial professionals.
Do NOT base your decision solely on what Henry Winkler, Robert Wagner, or Fred Thompson say on TV. Do NOT entrust your financial future to one of those “boiler-room” lenders or their slick salespeople. Instead discuss your questions with your financial advisor and CPA. Ask them for a referral to a competent, qualified, and Certified Mortgage Planning Specialist®. Working hand-in hand with your other financial professionals, we can determine whether a reverse mortgage is right for you. And if so, we can ensure the reverse mortgage integrates with and complements your retirement plan, your estate plan, and provides the extra cash flow you require to sustain your retirement.
Next time we will delve into some case studies which demonstrate how a reverse mortgage, when correctly utilized, can complement and sustain a retiree’s financial plan.
Warren Goldberg is President of Mortgage Wealth Advisors, a Certified Mortgage Planning Specialist®, and a published author. His interviews include Blog-Talk Radio, Newsday, The Daily News, Anton Press, 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.