Demystifying the Reverse Mortgage – Ways a Reverse Mortgage Can Help

Five Ways a Reverse Mortgage Can Be a Game Changer for Seniors, Adult Children, Financial Advisors and Realtors.

Many people aren’t aware of everything a reverse mortgage can do – and some have heard negative connotations. But reverse mortgages have evolved over the years and can be a lifesaver for a variety of financial challenges.

Here are just some examples of situations where a reverse mortgage can be a solution.

Reverse Mortgage Help - grandfather and grandson.

A reverse mortgage can be a game changer for many of the unique financial challenges faced by older adults.

Late-Life Divorces

 Are you going through the emotional and financial stress of a late-life divorce (also known as a “silver divorce”)? Or are you a divorce attorney trying to find the best way to divide housing wealth for your mature client? A reverse mortgage may be the win-win you’ve all been looking for. (Also read my detailed article on reverse mortgages and silver divorces).

Heirs to the Estate

Are your parents taking out a reverse mortgage and you want to ensure the estate is protected? A reverse mortgage is a non-recourse loan, meaning that there is no personal liability for the borrower to repay the debt, only the home’s value secures the debt. At any given time, the loan can be satisfied by repaying the funds borrowed plus the interest and mortgage insurance that has accrued. Future appreciation and remaining equity belongs to the estate.

If you and a sibling have inherited a home, a qualifying heir may take out a reverse mortgage to buy out the other sibling. Then the qualifying heir can live in the home without the burden of monthly mortgage payments.

Financial Advisors

Maybe you’re a financial advisor helping seniors manage their retirement plans so they can age in place. The majority of Americans hold 60-75% of their net worth in the form of home equity. Strategic and thoughtful use of reverse mortgages is a viable tool in protecting their portfolio from a poor sequence of returns, managing cash flow by reducing taxable draws, and helping retirees keep their draw rates at the suggested SafeMax of 4%/annum, adjusted for inflation.

Real Estate Investments

Are you a realtor working with potential homebuyers? From downsizing and right-sizing to purchasing a family vacation home, a reverse mortgage can help your clients afford the home they really want, without taking on a new monthly mortgage payment. Qualifying homeowners can also use a reverse mortgage to pay for home improvements and other needs.

HECM borrowers can also use this highly flexible financial tool as a source of funds to improve investment properties, thereby increasing income and the value of the improved asset. No monthly loan payments are ever required.

In-Home Health Care

Do you need help to afford in-home care now? Or perhaps your spouse needs the safety of a care home. You can up your tax-free cash flow by taking out a reverse mortgage line of credit to cover these unforeseen costs.

Do You Have Questions about Reverse Mortgages?

I have helped mature clients use a reverse mortgage to get through financial challenges in many unique situations. If you are interested in taking out a reverse mortgage loan—or are providing professional counsel to someone who is—contact me today to learn more about how a reverse mortgage could provide the sustainable solution you have been seeking.