Magazine October 2019

The Benefits of a Reverse Mortgage During Retirement

mortgage

This content is sponsored by Fairway Independent Mortgage Corporation

Looking into retirement options, one significant game-changer may be overlooked, even by experienced financial planners and banking professionals. A “Reverse Mortgage Loan,” isn’t an option to shy away from, according to Reverse Mortgage Planners at Fairway Independent Mortgage Corporation in Little Rock.

“A lot has changed,” says Robin Reid, branch sales manager. “‘Reverse mortgage’ is an old tag, but the thing to remember is that it has been reworked. There are updates worth mentioning, and we really need to get the word out.”

Reid points to the simplicity of the plan’s overall design and intention for those aged 62 and older with equity in a home. If a home is paid off, even better.

Overall awareness of reverse mortgages is important, she says. For one thing, NRMLA (https://www.nrmlaonline.org/about/pressreleases/senior-housing-wealth-exceeds-7-trillion-for-first-time)reports $7 trillion in home equity for those 62 and older. If that equity is converted to cash, the economy will get a boost.

“At the end of the day, it’s just math,” she says matter-of-factly. “And it’s work looking into.”

Here are the basics:

  • Available to those ages 62 or older
  • FHA-qualified home
  • Must live in the home more than six months a year
  • Generally will not affect Social Security and Medicare Benefits
  • Keep the title to your home
  • Basic credit and income qualifications
  • Never a monthly payment — still responsible for maintenance, taxes and insurance as long as the home is occupied
  • Repayment not required until
    • The last living borrower permanently leaves the home
    • The borrower chooses to sell the property

Harvesting cash from home equity also is a big takeaway for older Americans. When expenses pile up during retirement, finding additional cash flow is key. Reid says a reverse mortgage will do just that.

“If there are two people in a home drawing Social Security, for instance, and one dies, where does that leave the spouse,” she asks. “For example, if both spouses get $1,800 a month and the mortgage on a home is $900 a month, and one of them dies … that mortgage is going to be harder to pay and leaves very little for other necessities. A reverse mortgage can help.”  (Note story is for illustration purposes only)

Cash in hand is a big deal for aging Americans, especially as healthcare and home maintenance costs continue to rise. A reverse mortgage allows harvesting cash in any combination of the following:

  • Lump Sum
  • Line of Credit
  • Monthly Loan Proceeds Payments

Fairway’s Reverse Mortgage Planners are knowledgeable on the reverse mortgage product with correct an up to date information and take a family approach to decision making.

“We sit the whole family down,” says Fairway loan officer Gary Collins. “It is important that everyone involved, or who will be involved, understand how this works and what the benefits are.”

Today, with updated guidelines and federal revisions, there has been a paradigm shift on behalf of the reverse mortgage. It is not a loan of last resort. It is not designed for people in financial distress.

Fairway, branch manager, Reid says, can quickly do assessments for those curious — giving a quick overview to possibilities. But the real work comes with a face-to-face consultation and real talk about how a reverse mortgage can be used. It can be used in pre-planning to do things like reducing community spouse resource allowance, long term care planning, and overall estate planning.

For more information on reverse mortgages and to set up a consultation with a Fairway Independent Mortgage Corporation loan officer, contact the Little Rock office at 501-712-3908 or 800-541-3340.

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