Effective Retirement Planning for Baby Boomers…
WSJ Says: “Reverse mortgage loans aren’t just for people struggling to keep their homes anymore.”
It seems the word is out: reverse mortgages aren’t just for the financially desperate. In fact, they can be a valuable source of retirement planning when used correctly.
In an article, “Reverse Mortgages Can Help Rich and Poor Retirees,” published in the Wall Street Journal, detailing the benefits of a reverse mortgage as a financial planning tool and not as a last resort for “cash poor, equity rich” retirees.
In fact, the reverse mortgage loan can be a saving grace for many retiring baby boomers, potentially saving them from having to sell off investments at the wrong time.
One of the pitfalls of lack of retirement planning is the potential to use up all your savings when investment payouts and social security aren’t enough to cover your living expenses. When your savings are used up, however, they are gone, leaving many retirees to wonder where their income will come from next. Many consider a home equity line of credit without measuring the consequences this decision can have on their retirement.
In the past, retirees have been weary of applying for a reverse mortgage loan because of the relatively high fees associated with it. However, the introduction of the HECM Saver, which carries lower borrowing costs, has put many homeowners at ease when the time comes to consider a reverse mortgage to supplement their retirement.
The HECM Saver, or “Standby” Reverse Mortgage Loans, are a line of credit that can never be cancelled as long as there are funds available in the account. In addition, the HECM Saver gives borrowers control over when, and how, they use their line of credit. The flexibility of the HECM Saver is what makes it a dependable retirement planning tool.
Cash flow, if, and when, you need it, is crucial for successful retirement planning. An unexpected expense, on a fixed income, could put a damper on an otherwise relaxing, comfortable retirement.
There are crucial steps homeowners should take when considering a reverse mortgage.
Namely, if they have kids, it’s important to keep them in the loop. In a previous blog post, “R.E.S.P.E.C.T. Reverse Mortgages,” one of the keys to the Ciaccia’s success was discussing their plans with their children.
In addition, the article suggests consulting an expert from the very beginning.
By expert, I mean someone who knows the in’s and out’s of reverse mortgages. The fact that many banks left the business during the recession might have been a blessing in disguise. Independent brokers are have the time and resources to give each and every client personalized service and make sure clients understand the reverse mortgage loan process every step of the way.
Be aware that while you cannot lose your home under normal circumstances, foreclosure may occur if you do not pay your taxes and insurance and otherwise comply with the loan terms.
At PS Financial Services, a reverse mortgage company in Florida, we specialize in reverse mortgages, offering our clients service they can count on. If you think a reverse mortgage is right for you or have any questions, give us a call at (888) 845-6630 or email us at info@PSReverseMortgage.com. We do not pressure those who inquire, we’re simply here to help.