Part 1: “How Financial Planners Can Use a Reverse HELOC to Help Their Clients”
By Daniel J Turner NMLS#1016716 danturnermortgage.com dturner@Genevafi.com danturner859@gmail.com
Copyright 2020 All rights reserved. Use by written authorization only.
As we’ve been shown by the “American College of Financial Services”, Retiring Americans have very little actual wealth outside their home equity.
This is problematic.
On one extreme, they need money for retirement, so they SELL their home, and now have a large pile of money, but they have to live under a bridge because housing is never free. On the other extreme? They can get a 30 yr mortgage (at any age) and have 80% of that pile of money, but are now under the weight of ongoing principal and interest payments for the rest of their lives, and take extraordinary risks of forgetting a payment (or in other ways) be unable to meet the monthly life-long obligation of the mortgage. Longevity virtually guarantees failure at some point due to the mortgage interest payable each month will quickly eat up reserves.
Consider the reverse mortgage (HELOC) as a “middle-ground conduit” between these two extremes that will allow the Borrower to stay in their home without the commitment to ongoing payments, and give them ongoing access to capital (equity) under very favorable conditions.
I have been working in the reverse market since 2014 after retiring from 33 years in the Life Ins and (Series #7, clean records, clean U-5) business. I worked in the Credit Union market, and did basic financial planning for the middle-lower (blue collar) population. The American College numbers are correct; NONE of these folks had a penny. They were running in place like hamsters on a wheel. Many of them (over 35) owned homes and struggled to make the payments. Due to hardships, poor money skills, family burdens, etc. many would refinance and throw their payoff another 30 years down the road. Most of them would eventually die with a mortgage on their homes, and the ill-prepared family would have to deal with it.
Virtually every commentary I’ve ever read/heard about Reverse mortgages starts with this idiotic notion…”Reverse mortgages-They’re not for everyone”.
Well, if you’re under 62, don’t own a home, and can’t meet the debt to equity limits (under 50/50), that’s correct. A reverse mortgage is beyond your reach.
FOR EVERYONE ELSE? They’re a GODSEND. It’s now TIME and HIGH TIME to recognize this as a retirement tool designed for retirement…and yet, Planners shun this program as “unseemly”. “Expensive”. “Dangerous”. ALL of this is nonsense, and you need to STOP.
Let me be clear- If you own a home, can meet the debt/equity ratio, and you’re 62+? There is EVERY REASON to use a reverse, and NO REASON not to. This program is a wonderful and dynamic planning tool, and it takes a certain level of arrogance (IMHO) to think you can guide someone through their retirement without one.
To be painfully explicit? You are ignoring the obvious.
I remind this audience that it isn’t “bias” or “conjecture” when I can prove all of this. I intend to do that in the upcoming 3 Parts of this series.
Read Part 2: Disproving General Illusions About Reverse HELOCs
By the time we have finished this series, here’s what I want you to take away from this report:
1, Social Security should be the last program initiated at the LATEST date; the FHA HECM HELOC should be the first program initiated at the SOONEST date.
2. Waiting to establish this tool for planning is tragically expensive. Unnecessary mortgage interest, reduced credit line growth, Lost account liquidity, and other unnecessary losses.
3. Virtually EVERY CLIENT who owns a home (and certainly all who have current mortgage debt) should act and build their own Reverse HELOC program with the same enthusiasm they would have for finally beginning their social security income draw.
4. Bringing home equity into the retirement plan substantially improves the odds of never running out of money and expanding overall fulfillment in retirement by allowing more rather than fewer objective goals to be fulfilled.
5. Waiting to do this is increasing the probability of retirement income deficiency, or outright asset failure.
Read Part 2: Disproving General Illusions About Reverse
