Wade Pfau, Professor at American College

Wade Pfau who is a Professor of Retirement income at the American College in Bryn Mawr, Penn had the common opinion of many of those who represent the financial services industries, that Reverse loans were never a good option to be used to extend retirement funds.

But he recently changed his mind after attending a conference hosted by the Funding Longevity Task Force and found it to be very informative and conversely caused him to re-evaluate his attitude and understanding about why Reverse loans over a positive option for interment longevity.

Here is part of an article that discusses how he was converted to being a supporter of Reverse mortgages.   It is quite lengthy and I will share the reminder of it in a second post.

– Reverse Mortgage Daily – http://reversemortgagedaily.com –

Here’s How One Finance Professor Came Around to Reverse Mortgages

Posted By Emily Study On December 11, 2014 @ 6:58 pm In News,Reverse Mortgage | No Comments

“In the financial planning world, there are a few products that come with a tarnished reputation. A reverse mortgage is one of them.

But in recent years, professionals in the space have started to change their tune [1], recognizing the benefits [2] the home equity loan may offer to a retirement income strategy.

For Wade Pfau, this view on reverse mortgages started in October, when he attended a meeting hosted by the Funding Longevity Task Force, a group that was formed [3] to eliminate reverse mortgage misconceptions among financial planners and regulators.

Pfau — now a professor of retirement income at the American College in Bryn Mawr, Penn. — had been active in the financial planning world, having written for industry journals and spoken at leading conferences, but, he says, he didn’t know much about reverse mortgages.

Previous research [4] in the Journal of Financial Planning by John Salter and Harold Evensky (both of whom Pfau knows), among others, have pointed him in the right direction.

Their work has influenced Pfau’s own research on the topic, as he uses it as a springboard to make the case for reverse mortgages in a recent Wall Street Journal column [5] and in another article that quantifies [6] the reverse mortgage standby line of credit.

Reverse Mortgage Daily caught up with Pfau to learn what the reverse mortgage newcomer thinks of the industry, of the product and of its misconceptions. Here’s what he had to say:

Reverse Mortgage Daily: In your short time in this industry, what have you learned about reverse mortgages?

Wade Pfau: This is really something people don’t know a lot about. There’s a big misconception that you sign the reverse mortgage and the bank now has the deed to your home. But if you just use your home as a “last resort,” that’s constraining yourself. You could find a more efficient way to use your home equity and that’s what that standby line of credit can do.

At that [Funding Longevity Task Force] meeting, everyone was talking about how great a line of credit is, and now I understand it better. It’s because that line of credit just keeps growing no matter what the home price is. It’s a really good opportunity to protect the price of your home, because the line of credit can pretty easily grow to be higher than the value of the home as long as you live past your life expectancy.”

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