Wednesday, November 6, 2013

Reverse mortgages used as a retirement tool


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


 

Scott Larson

Broker, Reverse Mortgage Specialist

 

(408) 315-2503 direct

(408) 872-4002 fax

 



CA BRE 01023330  NMLS 295668

 
The Information Age offers much to mankind, and I would like to think we will rise to the challenges it represents.    But it is vital to remember that information – in the sense of raw data – is not knowledge, that knowledge is not wisdom, that wisdom is not foresight.  But information is the first

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