Video of Dr. Pfau and Jamie talking about reverse mortgages
by Barry H. Sacks, J.D., Ph.D., and Stephen R. Sacks, Ph.D.
This paper examines three strategies for using home equity, in the form of a reverse mortgage credit line, to increase the safe maximum initial rate of retirement income withdrawals.
These strategies are:
- the conventional, passive strategy of using the reverse mortgage as a last resort after exhausting the securities portfolio; and two active strategies
- a coordinated strategy under which the credit line is drawn upon according to an algorithm designed to maximize portfolio recovery after negative investment returns,
- drawing upon the reverse mortgage credit line first, until exhausted.
Full paper here.
by Wade Pfau, Ph.D., CFA
Originally published at Forbes
Repayment of a home equity loan balance may be deferred until the last borrower or non-borrowing spouse has died, moved, or sold the home. Prior to that time, repayments can be made voluntarily at any point to help reduce future interest due and to allow for a larger line of credit to grow for subsequent use. There is no penalty for early repayment.
This handbook provides updated instructions to approved mortgagees and to HUD Field Office personnel regarding the processing and servicing of a Home Equity Conversion Mortgage (HECM).