Advisor Magazine: Leverage Housing Wealth with Reverse Mortgages

Reverse mortgages can be useful financial tools in helping retired homeowners leverage one of their most valuable resources hiding in plain “site”: their housing wealth. But while these products have caught the attention of several prominent financial planners, many advisers remain clouded by outdated information, according to a recent article published by Advisor Magazine.

A slew of research and commentary in recent years have encouraged consumers as well as other financial professionals to take a fresh look at reverse mortgages, following the implementation of program changes such as the Financial Assessment, upfront draw limitations and updates to the non-borrowing spouse policy.

Furthermore, concerns that American retirees will fall woefully short of having enough savings to live on during retirement have also generated a keen interest among financial planners, retirement researchers and even a Nobel Laureate, to analyze how housing wealth could effectively fit into the equation for many retirees, according to the Advisor Magazine article written by reverse mortgage industry veteran Shelley Giordano.

Giordano, who also chairs the Funding Longevity Task Force, a group comprised of distinguished members of the financial planning community, writes that advisers who ignore the recent changes made to reverse mortgages “will fail to appreciate how the prudent use of housing wealth in the distribution phase can contribute to cash flow survival and even improve the overall bequest” for retirees and their heirs.

The article describes, for advisers, how reverse mortgages have changed in recent years, including the enhanced protections implemented via the Reverse Mortgage Stabilization Act of 2013, which forbid borrowers from using too much equity too soon.

Giordano also highlights why it is important for financial advisers to reconsider reverse mortgages today, especially in light of the recent Home Equity Conversion Mortgage program changes and the potential benefits that can be realized through the strategic use of a reverse mortgage line of credit.

“If the first impulse is to counsel clients to ‘wait’ until the portfolio is depleted before establishing a HECM Line of Credit, the adviser is giving out-dated advice,” Giordano writes. “Compliance officers who forbid conversations with clients on how a significant asset, the home, can improve retirement outcomes are not meeting appropriate standards of care.”

Read the Advisor Magazine article.

Written by Jason Oliva

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