As I mentioned in the previous post, financial advisors are suggesting to their wealthier clients to consider using funds from a Reverse mortgage in lieu of drawing down on their investments. The number one concern of just about everyone, is running out of money and one way to slow that possibility down, is to use a Stand By Reverse loan.
Here is the remainder of the article:
HuffPost: Why Reverse Mortgages Make Sense for Affluent Boomers
Posted by Emily Study On July 8, 2015
“This is not just for the destitute, which is what the perception was for quite a long time,” Fiore told The HuffPost. “That’s when you will start to see the volume increase because people will look at it as a legitimate tool for retirement.”
A shift in reputation has also led to reverse mortgages becoming a bigger part of the financial planning conversation, with advisors embracing the product as a way to hedge against future costs and plan ahead.
“The financial planning community has really adopted the product in a positive way,” Fiore said.
In closing I would like to mention a study from last year called “The 6% Rule VS the 4% Rule in that various scenarios were created, showing how using a Reverse loan could extend the longevity of retirement funds by many years.
The study was written by Gerald Wagner, Ph.D and in the study he found that ” the 4% rule works well with portfolios that are at least 50% invested in equities and then shows how the use of a reverse mortgage can be used to ‘easily create new rules, such as the 6% rule for a 30 year horizon'”.
I am sharing a brief summary of an article that was recently published by CNN about why more financial advisors are reconsidering the FHA loan as an option to extend retirement funds.
Overall, the article is good but it does make a mistake in regards to Closing Costs that I discussed in a previous post.
The Origination fee CAN be as much as $6,000 but depending upon which loan program is used and the interest rate associated with it, the fee drops and in some cases the borrower can receive a credit towards the fee. Reducing the Closing Costs overall.
CNN Money: Reverse Mortgages Poised to Be Mainstream Strategy
Posted By Jason Oliva On May 20, 2014 @ 4:25 pm In News,Retirement,Reverse Mortgage |
“Reverse mortgages, what were once considered options of last resort, are now poised to become a mainstream financial strategy for older adults looking to shore up their retirements, reports CNN Money in a recent article .
Now that reverse mortgages have undergone a variety of program changes, financial services companies are aiming to make these loans more appealing to consumers, with some advisors even touting them as standby credit.
‘“Home equity is key to Americans’ retirement security, so it’s crucial to responsibly offer reverse mortgages,” said Christopher Mayer, a Columbia Business School professor and CEO of Longbridge Financial, in the article.
The article also encourages readers to weigh the costs of reverse mortgages, among other considerations, to determine if these loans are a good fit for one’s own financial situation. ”
The following article was written last September, but is certainly still relevant now as it was then, drawing attention to the pending crisis on how to pay for long-term-care as the population ages.
10,000 Boomers are turning 62 each day and most of them won’t have enough savings to pay for any medical crisis that could occur as they age and most of them have not purchased Long Term Care insurance.
Federal and state governments are concerned about the financial impact that will effect programs, many of which have already been discontinued due to lack of funding and the families of seniors.
Here is the first part of the article and I will share the rest of it in two more posts.
Committee Touts Reverse Mortgages Among Solutions to LTC Crisis
Posted By Alyssa Gerace On September 18, 2013 @ 6:14 pm In Reverse Mortgage
“The federally-appointed Commission on Long-Term Care included reverse mortgages as a way to fund long-term services and supports among other recommendations to Congress on how to address the needs of the aging population.
On Wednesday, the committee submitted the final report to Congress following a Sept. 12 vote in favor of its recommendations, which are meant to renew national discussion regarding how to address the issues and challenges of the aging American population. The vision is to create “a more responsive, integrated, person-centered, and fiscally sustainable LTSS delivery system that ensures people can access quality services in settings they choose.”
Currently, the federal and state governments pay for 62% of paid LTSS, amounting to more than $130 billion a year, the Commission’s report says.”