Financial Advisors in Birmingham
How A Reverse Mortgage Can Help You Prepare Your Client for An Unexpected Early Retirement.
We have seen a tremendous amount of clients being sent to us by Birmingham Financial planners. I can only guess that the are seeing that the Reverse Mortgage is a great income supplement tool.
You can call any time and we will be happy to put together something for you and your clients. Many people have asked us to meet with their local 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. Read NAELA JOURNAL Bank, Credit Union, Financial Planners.
Financial Advisors sand 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.
Financial Advisors we would be happy to come by appointment and explain and show proof on how many ways a Reverse Mortgage can be used. I had a client the other day that her planner had to can another planner in another state to find out about Reverse Mortgages. I would love the opportunity to show you the ways very wealthy people have used them.