A Financially Secure Retirement Through Reverse Mortgage Loans

What’s the deal with seniors getting reverse mortgage quotes from online lenders? This question was recently answered during a symposium on Housing Wealth in Retirement held last March 23, 2018 in Washington DC.

The symposium took a broader look on housing wealth and retirement security as well as the role that reverse mortgage plays under the Home Equity Conversion Mortgage (HECM) program that is under the sponsorship of the federal government. The key takeaway is reverse mortgages are underutilized by seniors. Reverse mortgage when used appropriately can add retirement funding security to seniors who are 62 years old and above.

According to Dr. Wade Pfau and Dr. Barry Sacks, reverse mortgages when used the right way can support a more secure retirement compared to the traditional mortgage. DrPfau explained that reverse mortgage can extend the longevity of a retirement portfolio if it is used to pay off the traditional home mortgage. The senior homeowners enjoy the flexibility of making mortgage payments when their cash flow and retirement portfolio can support the payments throughout retirement. In the traditional mortgage, homeowner has to make monthly payments to avoid the risks of default.

Dr. Sacks also explained how the reverse mortgage can supplement the income of a retiree. With an additional cash flow, the percentage that an individual needs to take from investments when the market is down is reduced. This will allow the portfolio to last longer so that the retiree will enjoy the best retirement life.

However, there are concerns that reverse mortgage’s longevity may cause the retiree to outlive the money in retirement. There are existing regulations for consumer protection to assist borrowers throughout the life of the reverse mortgage loan. This means that the seniors can live in the home for life because the debt will never exceed the value of the home at the end of the loan.

Seniors who want a financially secure retirement should take a second look at reverse mortgage. However, even if you have received reversed mortgage quotes, it is still important to shop around and get advice from experts on how to use the product. Ask your questions and allow the experts to answer them before making a decision.