Reverse loans have not been considered by Financial Advisers to be a viable option when it comes to retirement planning and if anything they have been very, very negative about them.
The main reason I think that this has been their prevailing attitude, is because they have never fully understood them and how they can actually benefit retirement planning if used as part of one of the options for a plan.
Gradually, their attitude has begun to turn around, albeit very slowly but many of them are now seeing how the use of a Stand Alone Reverse loan can extend retirement funds for their clients.
Plus, the majority of the Boomers are still carrying a mortgage on their homes and will be burdened with payments and may not be able to retire. Rather than drawing down on a portfolio of investments, funds from a Reverse loan can pay off any existing mortgages and offset any income shortages and cover any other unforeseen costs that may occur in the future.
The trade journal to Financial Planners recently ran an article talking about the benefits of the FHA HECM program and why they should seriously being to consider this to be another avenue to solidifying a retirement fund.
Here is a copy of the article with the remaining portions to follow in the next couple of posts.
Financial Planners: New Rules Make Reverse Mortgages Attractive
Posted By Cassandra Dowell On August 28, 2014 @ 6:50 pm In Reverse Mortgage | No Comments
“Financial Planners should consider recommending reverse mortgages for elderly clients and for the parents of middle-aged clients, writes Financial Planning in a recent article , noting that new rule changes  position the product to better protect borrowers.
“[Reverse mortgages] can be a very useful tool for seniors who plan to stay in the home for a long time,” Jim Kinney, who heads Financial Pathway Advisors in Bridgewater, N.J., tells Financial Planning.
However, Kinney cautions, reverse mortgages are not a good fit for those who do not have the resources to maintain their home.
As a consequence, applicants now must undergo a financial assessment in order to qualify for a loan; lenders are required to make sure a borrower can pay for insurance, taxes, and home maintenance, based on the applicant’s assets and cash flow.”
The last paragraph is not entirely correct. As of this time, the financial assessment is not being done but we anticipate it to be in place before the end of the year. There will be no “pass” or “fail”, but rather if it’s determined that the borrower might have some difficulties paying their property taxes and homeowners insurance, the lender will create an Escrow account to cover these expenses.