Creative Uses for Reverse Mortgages
By Dan Hultquist · Navigating Reverse, updated annually
Most reverse mortgage borrowers will see a benefit in paying off a traditional mortgage and increasing cash flow. However, financial planners are realizing that housing wealth can offer creative solutions for a more efficient retirement. Here are a few to consider.
Many who don't qualify for long-term care insurance may be good HECM candidates for a reverse mortgage. A growing line of credit can often fund care directly or pay the premiums of existing long-term care policies.
A reverse mortgage can be useful when dividing marital assets in a divorce. In some cases, a reverse mortgage can compensate a departing spouse without disrupting their traditional retirement planning.
Poor market returns early in retirement can be devastating to a retirement portfolio. Drawing from home equity during bear markets can protect those traditional retirement assets and allow a portfolio to recover.
While some homeowners draw from home equity during bear markets, the gains of a bull market may allow some homeowners to pay down reverse mortgage loan balances — a two-way strategy for managing retirement wealth.
Many pre-retirees face a decision: accelerate payments to reduce their mortgage balance, or save funds for retirement? Making payments with a HECM may accomplish both objectives simultaneously.
Baby boomers hold a disproportionate amount of wealth in real estate. Those who wish to relocate, upsize, or downsize can supplement retirement savings by using a HECM to purchase their next home.
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