Retirement News with Professor Craig

Retirement News with Professor Craig

The Retirement News blog is dedicated to the financial and physical health and well-being of older Americans. 
Whether you're already in or nearing retirement, you will find important, topical information in the blog to help you make informed decisions on your road to retiring more freely.
As a 25-year veteran in the financial services industry and a certified trainer and teacher, Professor Craig's #1 goal is to help you thrive in retirement with financial peace of mind. 

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The Benefits of Reverse Mortgages are Catching on… Just Ask Your Financial Advisor
Retirement News, Financing Retirement, Retirement Planning

The Benefits of Reverse Mortgages are Catching on… Just Ask Your Financial Advisor

Financial pros are seeing the real advantages of reverse mortgagesFinancial pros are seeing the real advantages of reverse mortgages

Since its creation in 1961, the reverse mortgage loan has developed significantly over the years to become what it is today — a strategic financial tool for homeowners age 62 and over. How? By allowing qualified homeowners to leverage the equity built up in their home.

Borrowers can free up extra cash to pay for necessary medical expenses, make home renovations, supplement their income or simply afford a more comfortable retirement.

For the right candidates, a reverse mortgage can be a valuable retirement planning tool. But it wasn’t until the last decade that many financial advisors started recognizing its many advantages.

A shift in thinking about reverse mortgages

In 2014, the Federal Housing Administration made changes to underwriting guidelines, increasing the reverse mortgage’s popularity among financial advisors. By requiring lenders to evaluate a borrower’s credit history, income and debt, they could better determine if they were at risk of defaulting on the loan.

These new rules also ensured that in certain circumstances, lenders may require borrowers  to establish a mandatory set-aside of funds to cover property taxes, insurance and home maintenance fees, helping to curtail irresponsible borrowing. As a result, more financial advisors looking for new strategies to help retirees, started recommending reverse mortgages as part of a thoughtful retirement plan.

In a Reverse Mortgage Funding (RMF) study, 40% of financial advisors said they have recommended a reverse mortgage to a client — a marked increase from 2012 study where only 16% reported that they suggested a reverse mortgage. 

Financial knowledge is power

Over the years, lack of reverse mortgage education was a key factor keeping financial advisors from recommending reverse mortgages to their clients. According to Dr. Craig Lemoine, director of the Financial Planning Program at the University of Illinois Urbana-Champaign and executive director of the Academy for Home Equity in Financial Planning, many financial professionals lacked a sufficient understanding of this valuable tool.

As Lemoine explained to Reverse Mortgage Daily last year, “It simply comes down to the ways in which human understanding works: in a professional capacity, if you know enough detail about a product or service, you can then speak more authoritatively about the ways in which that product or service can be applied to a relevant situation.”

Today, reverse mortgages are viewed by many financial professionals as a viable solution for qualified clients looking to improve their financial standing. More financial advisors can stand behind the benefits, including:

  • Retirement asset growth. The longer you can defer tapping into your retirement accounts, the more time they have to grow.
  • Delayed Social Security and/or pension disbursements. The funds from a reverse mortgage may help you delay the collection of these benefits, so you can increase the amount you’ll receive down the road.
  • No monthly mortgage payments. A reverse mortgage doesn’t require monthly payments, which may help increase your cash flow. You remain responsible for loan obligations including property taxes, insurance and keeping up with the home’s maintenance.
  • A growing line of credit. One way to access your reverse mortgage funds is through a line of credit that’s available if and when you need it. And the best part is it grows over time*.
  • More cash at your disposal. Whether you receive your funds in a lump sum or in mothly payments**, you’ll have cash on hand to manage debt, pay for medical bills or boost your cash reserves.

Building a financially sound retirement

Are you on track to afford the retirement lifestyle you deserve? To learn if a reverse mortgage is right for you, speak to your financial advisor or call RMF today at (888) 277-1567. We’ll answer your questions and schedule an in-person or virtual appointment with a loan specialist in your area.

This content is sponsored by RMF, one of the nation’s leading reverse mortgage lenders. We are dedicated to helping older Americans retire more freely, in the comfort of their own homes. As a result of our commitment to providing an extraordinary and positive customer experience, we have earned a 98% customer satisfaction rating; a 4.8-star / Excellent score on Trustpilot; 4.8 out of 5 stars on LendingTree; and an A+ rating with the Better Business Bureau. Call 888-277-1567 to speak with a licensed reverse mortgage specialist to learn about our retirement financing products and solutions.

*If part of your loan is held in a line of credit upon which you may draw, then the unused portion of the line of credit will grow in size each month. The growth rate is equal to the sum of the interest rate plus the annual mortgage insurance premium rate being charged on your loan.

** Borrowers who elect a fixed rate loan will receive a single disbursement lump sum payment. Other payment options are available only for adjustable rate mortgages.

SEE WHAT FUNDS YOU MAY HAVE AVAILABLE

If you have equity in your home and believe you meet the eligibility requirements, a HECM may be the option that could help you retire smart.

Check Eligibility

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A More Flexible Home Equity Loan

If you’re 62 or older, there is a home equity line of credit option that offers greater financial flexibility than a traditional Home Equity Line of Credit (HELOC). It’s called a Home Equity Conversion Mortgage (HECM) line of credit. 
If you have an existing mortgage or home equity loan you could refinance them with a HECM line of credit and get enhanced benefits, including a flexible payment feature and a line of credit that GROWS when left untouched.
As with any mortgage, you must meet your loan obligations, keeping current with property taxes, insurance, and keeping your home in good condition.


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