Benefits of using reverse mortgages in retirement
Some reverse mortgages are federally insured by the Federal Housing Authority's Home Equity Conversion Mortgage program, and are HECMs. These loans are a tool more and more people in retirement are considering for a variety of reasons.
The sandwich generation, defined by Wikipedia as: “a generation of people who care for their aging parents while supporting their own children”, are looking for new ways to leverage financial resources without becoming a burden on the people they are caring for. You may find yourself both a baby boomer and part of this sandwich generation looking to provide for the generation older and younger than yourself.
As you enter or approach this time, you may want to consider reverse mortgages as an option. In the past, reverse mortgages have gotten a bad rap, mostly due to the prevailing fraud in the early 2000’s and before. And sadly, since the product is geared for homeowners age 62 and up, it was seniors who were taken advantage of in those darker financial days. Fortunately, the FHA stepped in and has imposed strict regulations on reverse mortgages to make them safer for seniors than ever before.
As with any financial product, including mortgages, ethics of the advisor is of utmost importance. Fraud can come in the form of selling products that are not in the best interest of the client, and a seasoned and reputable mortgage broker will point you in the right direction, whether or not that is reverse mortgages. It is important to consider your options and you should never feel pressured into making a quick decision. In fact, we want just the opposite for you- we want you to know the costs, risks, benefits and options upfront. We want to answer all your questions about reverse mortgages, as well as the questions of another trusted person in your life, so you can make the best informed decision.
Reverse mortgages are being used to help people 62 and older, who have equity in their home or own their home free and clear, to have a better quality of life. By converting the equity in your home into a tax free* cash flow, you may be able to make wanted lifestyle changes such as purchasing long term care insurance, protecting your home equity for your children against nursing home expenses or even bridging the Medicare gap from age 62 to 65. This tax-free* cash flow can allow you to delay your social security benefits and even allow you to keep money invested in other areas that would be taxed or penalized if withdrawn. Also research shows that a reverse mortgage allows people to remain in their home longer.
The FHA (Federal Housing Administration) insures legitimate reverse mortgages and not all homeowners are eligible. If you would like to learn more about reverse mortgages and if they are right for you, contact Reverse Mortgage Planner Kevin Guttman today for a no-obligation consultation.