Looking to free up $4 million to fund your retirement or pay off your mortgage?
If you’re a senior with serious digs in places like California or the New York City area or other markets where many homeowners are house-rich and cash-poor, you might be able to secure such funds with only your home. The market for jumbo reverse mortgages has come back to life.
Reverse mortgages, in which retirees tap the equity in their homes through mortgages that don’t have to be paid as long as they live there, were long regarded as a last resort. Then financial experts began publishing research several years ago showing that the strategic use of reverse mortgages could help retirement portfolios better survive down markets or delay the claiming of Social Security benefits.
Written by Richard Eisenberg on November 25, 2019.
This Forbes article highlights the most important things to know before getting a reverse mortgage; including knowing the obligation of the mortgage and be aware of the fees associated with HECM loans.
As we enter retirements, the change in lifestyle is an inevitable challenge for almost every retirees. How can you preserve your lifestyle without steady income streams? How to utilize your existed assets to support your retirement? To answer these questions and offer more advice, Shelley Giordano launched “What’s The Deal With Reverse Mortgages” second edition on Kindle. Learn more about the retirement assets folks don’t know they have.
The reverse mortgage market world heads in reverse away from the government created Home Equity Conversion Mortgage (HECM) and towards new propriety products. This is an encouraging sign because any healthy market needs competition, innovation, and variety. However, recently HECM program has been the driving force behind the reverse mortgage world, leaving many without an ideal solution to utilizing home equity as part of a sustainable retirement plan.
Hear from Jamie Hopkins in this Forbes article regarding the public’s opinion on reverse mortgages: “A few years back, I conducted and published research in the Journal of Financial Planning that showed Americans don’t understand reverse mortgages. In fact, respondents scored below 50 percent on a 10-question true-false quiz.
One possible explanation for the poor performance is a lot of misinformation floating about. A recent USA Today article titled “Considering reverse mortgages? Better to reverse course on this risky course” confirms my belief. The article contains many half-truths and misunderstandings and projects a negative connotation of reverse mortgages onto the reader.””
The Journal of Retirement Fall 2015, 3 (2) 61-79; DOI: https://doi.org/10.3905/jor.2015.3.2.061
There is little doubt that many older Americans are not well prepared financially. The reverse mortgage is a financial instrument that can brighten their financial prospects and reduce the chances of an old age in financial straits. This article explains how reverse mortgages work. Recent research shows that strategically combining reverse mortgages and investment portfolios can significantly boost sustainable retirement income. Moreover, in the last three years the regulatory framework has been revised to develop further the market for these instruments. Reverse mortgages are increasingly recognized as a valuable financial planning tool. They are now seen as well suited for retirees—not only underfunded homeowners who turn to a reverse mortgage as a last resort, but also those who enter retirement well-funded.
Two major retirement challenges could be addressed through a simple innovation. First, long-term investors are struggling to meet their (lowered) target rates of return. Attempts to raise returns by investing in riskier assets only raises the risk of future underperformance. Second, individuals have insufficient retirement savings and are facing the prospect of a meager retirement paycheck. A new real estate sub-asset class, iHomes (Income from Homes), created by innovative funds and real estate managers, could address these twin challenges with attractive results for all parties. The solution rests in allowing retirees to tap into home equity to generate income, and for innovative investors to get rewarded for supplying capital for these transactions.
To dig into the article regarding home equity and reverse mortgage, click here.
“The reverse mortgage market is evolving for the first time in a decade, as the industry pivots to address sagging sales and what it sees as a new opportunity presented by the number of baby boomers retiring.
Reverse mortgages are a type of loan that allows seniors to tap their home equity, as a lump sum or line of credit, without having to make out-of-pocket payments. The market has been dominated by a single product, a home equity conversion mortgage, which is insured by the federal government and sold by approved lenders. “
By Laurie Goodman and Edward Golding on May 31, 2019
The Home Equity Conversion Mortgage (HECM) program from the Federal Housing Administration (FHA) lets seniors tap into their $7 trillion in housing wealth to help them pay for living expenses that many have difficulty affording. But this program has proved very costly to the FHA, prompting the FHA to narrow the eligibility of the program, resulting in decreased participation.
To find out more about the potential solutions to this issue, click here.