How A Reverse Mortgage Can Help You Prepare Your Client for An Unexpected Early Retirement.
You can call any time and Scott will be happy to put together something for you and your clients. Many people have asked Scott to come meet with their local Birmingham financial advisors and then proceed. It helps when their portfolio is dropping, and they want to sell. Call Reverse Mortgage Alabama with a local office in Birmingham. Trusted advisors can simply be a second set of ears; from your adult children, financial planner, estate planner, minister, neighbor, or anyone else to assist you in the decision-making process. Now FINRA has a positive outlook on Reverse Mortgages and see it as a longevity tool. We even have a new name for an epidemic problem in the future. THE TIME BOMB is for the person that has done an above average job planning and would use a financial planner. They have a bucket for everything, except with planning for expensive in-home care. With 50% expected to have dementia or Alzheimer’s even people with long term care policies might not have enough. For example, if a 65-year-old couple takes out a Reverse Mortgage on a $500,000 house and leaves all the money; approximately $250,000 in the growing line of credit, at age 99 it would have grown to 1.5 million dollars. Anytime in between there would be a tremendous amount of money available to pay for in home care. These funds are not taxable.
How Reverse Mortgages benefits social security?
For many, Social Security will be a vital—and significant—source of retirement income. Unlike most sources of retirement income, Social Security benefits are adjusted periodically for inflation. Perhaps the biggest decision you’ll make about Social Security is when to apply for your benefits. You can take reduced benefits at 62 or wait until you’re eligible to receive your full benefits—which will depend on the year in which you were born—or postpone your first payment to qualify for a larger amount. Financial advisors suggest waiting at least until you are eligible for full benefits, or even longer, if you can do so. The SSA offers many tools and resources to help you understand your Social Security benefits and how best to plan for the day when you will tap those benefits to help fund your retirement. Read on
Financial Advisors and CPA’s. A reverse mortgage loan is not for everyone. Our goal is to work with trusted financial and legal financial advisors and CPA’s to help determine if a reverse mortgage meets the needs of your client. We can accomplish this by providing detailed loan scenarios to you (with your client’s permission) and personal consultation with our staff to help reach a decision that is in the best interest of all parties. We are up front with our clients about the advantages and disadvantages of a reverse mortgage.
What are the Advantages of a Reverse Mortgage
Reverse mortgages provide many advantages for the senior borrower. Here is a short list of just a few:
- Proceeds received from a reverse mortgage proceeds typically do not affect Social Security or Medicare
- Provides access to their home equity without the requirement of monthly mortgage payments. Borrowers must continue to meet ongoing property obligations such as homeowner’s insurance and property tax payments.
- Could allow senior to purchase a new home with no monthly principal and interest mortgage payments
- Could provide source of cash flow while borrower allows their investments to recover from market losses
- May improve a senior’s standard of living or allows them to live out their non-working years with fewer financial worries
- Pays off existing mortgage freeing up monthly cash flow which would have been committed to ongoing mortgage payments. With the reverse mortgage there are no more required principal and interest mortgage payments. Borrowers are required to continue making payments for homeowner’s insurance and property tax charges and obligations.
- Allows the senior to maintain their independence while living in their own home
- May provide money for in-home health care or medical expenses
What are the Disadvantages of a reverse mortgage?
- Potential foreclosure of home if the borrower does not meet the ongoing obligations of the loan such as paying property taxes, homeowner’s insurance or other required property charges
- Spends part of the equity that would be passed on to the estate or children.
- Increasing loan balance, decreased equity over time, may affect eligibility for needs-based programs such as Medicaid, Medical, or SSI
- For those itemizing tax deductions, a reverse mortgage can eliminate the deduction for home interest if no interest is paid out of pocket. However, if the homeowner pays the upfront fees and the accruing interest, the homeowner deduction may be available to them in the year the interest is paid. Closing costs and insurance are expensive which means the borrowers should plan on living in the home for several years to reduce overall cost.
Who should get a reverse mortgage?
There is no stereotypical reverse mortgage client. There are some considerations for those who may benefit from this unique loan. The borrower typically has substantial home equity and has a limited or fixed income but wants to maintain or improve their current lifestyle. Prefers to access mortgage loan proceeds instead of other accounts or sources which may be taxable. Wants to remain in the home and age in place utilizing a reverse mortgage. Home Equity Conversion Mortgages (HECMs) are the only Reverse Mortgages insured by FHA
Call Scott Underwood “Alabama’s Reverse Mortgage Guy” since 2007 to ask how you might could help out your clients with a Reverse Mortgage. Birmingham office (205) 908-2993,