Making Sense of Reverse Mortgages Information you need to make a good decision!

November 11, 2013

Reverse Mortgage Planning

Filed under: Uncategorized — Scott Larson @ 12:39 pm
A good article about some of the changes to the reverse mortgage program
To summarize, the October changes reduced the amount available to most borrowers
But…
the recent changes to the HECM program are a step in the right direction because
they aim to make the loans safer and encourage loan usage as a long-term financial-planning tool,  rather than as a disaster-recovery tool for households already facing significant financial stress.
The key takeaway in the article though is found here
Some planning experts have started advocating the use of HECM credit lines as a backup resource in lieu of a large cash reserve because the latter produces negative returns in the current ultralow interest-rate environment. Harold Evensky, president of  Evensky & Katz Wealth Management, is co-author of a paper published last year
examining how retirees can use a HECM line of credit in bear markets to avoid selling equities.  The strategy extends portfolio life anywhere from 20% to 60%, depending on the scenario specifics.

(Emphasis mine)

If you would like more information, or if you feel that this is something you would like to explore, give me a call.
In the meantime, you can read the article here
 

 

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