According to a recent article in the Wall Street Journal, new safeguards have led many advisers to explore when and how to use reverse mortgages in financial plans.
The repayment-deferred Home Equity Conversion Mortgage (HECM), FHA’s recently-revamped version of the former “reverse mortgage” is fast becoming a retiree’s best friend when endeavoring to extend cash flow survival over the long haul.
“One of the advantages of the federally insured reverse mortgage, the HECM, is that the government assumes some of the risk for the borrower,” says Stephanie Moulton, an associate professor at Ohio State University and co-author of a 2015 paper on reverse mortgages published in the Journal of Urban Economics.
Advisers are also suggesting that homeowners establish a line of credit through the HECM program whether they need the money immediately or not. Once touted as a “last resort,” these federally-regulated and HUD-insured retirement mortgages have been re-designed as more of a financial planning tool, to help retirees incorporate housing wealth and create a healthier, and wealthier, income stream throughout retirement.
Is a reverse mortgage a viable tool for your clients? Contact Mary Jo Lafaye at (415) 259-4979 or email info@maryjolafaye.com for more information.
