Advisors can help prepare a client for an unexpected early retirement. Call any time and I’ll be happy to put together something for you and your clients. Many people have asked me to come meet with their advisors and then we did proceed. It helps when their portfolio is dropping and they want to sell. Call Reverse Mortgage Alabama with offices in Birmingham, Hoover, Huntsville and still making house calls to Pelham, Tuscaloosa, and Gardendale. 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.
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. Many financial advisors suggest waiting at least until you are eligible for full benefits, or even longer, if you are able to 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.
Advantages—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
- 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 costs
A Potential Reverse Mortgage Borrower—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.
FINRA (Financial Planning organization) for the purpose of protecting investors) Debunks Reverse Mortgage Misconceptions Potential borrowers should know all of the facts before getting a reverse mortgage, and a recent podcast from the Financial Industry Regulatory Authority (FINRA) clears up some common misconceptions associated with the product. Read
Robert C Merton. Nobel Prize-winning economist talks about Reverse Mortgages. Read story