Historically Financial Planners have not been supportive of the use of a Reverse mortgage as part of retirement planning. But that is beginning to change as many of them have attended seminars for C/E credits and been more exposed to the benefits that the program provides.
After attending some of these educational forums many Financial Planners have indicated that they have changed their minds about utilizing a Reverse mortgage as a way to protect their clients investments.
Following is an article from the Wall Street Journal that discusses this change in attitude.
Wall Street Journal: Reverse Mortgages Can Help A Wide Array of Retirees
Posted By Elizabeth Ecker On August 18, 2013 @ 4:59 pm In Reverse Mortgage |
“Reverse mortgage benefits can span a wide population of older Americans spanning both those trying to keep their homes, as well as “well-heeled retirees” seeking an investment buffer, the Wall Street Journal writes in an article  this week.
With the print headline “Reverse Mortgage Rethink,” the WSJ delves into academic research  on the Home Equity Conversion Mortgage Saver led by John Salter and Harold Evensky at Texas Tech that has effectively positioned the Saver loan as a safeguard against losses across other investments in a retiree’s portfolio.
“Retirement is really about cash flow,” Martin James, a certified public accountant in Mooresville, Ind., told the WSJ. “Even for a person who’s got their mortgage paid off, it’s nice to have a line of credit sitting there.”
No longer a loan of last resort, the article writes, financial planners today are taking a different approach to reverse mortgages, though there are changes in store expected later this year, following congressional approval of the Department of Housing and Urban Development toward altering the HECM program.
Citing the use of a reverse mortgage as a way to eliminate mortgage payments, save on withdrawing from retirement investments that are subject to tax and serving as a “bridge” to withdrawing on Social Security, the article includes two pieces of advice for those who are considering taking out a reverse mortgage: consult an expert and keep kids in the loop—especially because children of reverse mortgage borrowers are often at first uncertain of the idea.
“My first answer, when people ask how to approach the kids, is to ask them if they have an extra room in their house for their parents,” Salter told the WSJ.”
Here is the remainder of the article discussing the pending changes to the HECM Reverse mortgage program.
“Officials have stated to Congress and the public that the desired changes  will shore up the FHA’s insurance fund for its HECM program and will also make the products safer and more sustainable for borrowers.
While additional program changes have been discussed, including a financial assessment of borrowers and a set aside for property tax and insurance payments, those changes are not expected to come in the first set of product changes, rather they are expected to be released in the coming months.
The new product will come with new mortgage insurance premiums that are dependent upon the amount that is drawn upfront and whether that amount falls under or exceeds a 60% threshold. Only borrowers with mandatory obligations will be able to exceed that threshold.
Details are expected from HUD some time before September 1. The agency has stated  it would like to implement the changes before October 1, 2013.”
Written by Elizabeth Ecker