by Warren Strycker, financial professional.
Editor’s Note: For more than ten years, I have pitched the message of hope in the reverse mortgage as a missionary loan originator, mostly to people who were not in a position to do anything else. They did not prepare for retirement (for whatever reason, good and bad) and the only assets left were in their home equity. I helped a lot of good folks get a new start when there was no other way to go financially.
The process was often tough on them as it was tough on me to accomplish it. Those who found joy in badmouthing what I did was mostly not acquainted with the facts and didn’t want education for competitive reasons they defended sometimes viciously. I never participated in the bad faith use of the proceeds that the enemies of the reverse mortgage touted as true, and mostly I don’t believe many went to the casinos with their home equity proceeds.
My take on the reverse mortgage is pretty simple. Over the years, you paid mortgage payments so that one day you could use the equity you built up by taking a big part of it out in a refinance. You own the equity and you have the right to use it. Equity in your house it pretty much “dead” in that it serves no real purpose other than personal pride.
Any payments you make with a reverse mortgage not required and mostly people don’t make them, enjoying the increased cash flow in the household budget as a bonus.
As years progress, the reverse mortgage has become the butt of a lot of people’s emotional views preventing those who qualify for financial relief from enjoying the benefits of another chance at thriving in retirement. As a result, people getting a reverse mortgage would rather keep it quiet because they believed to get an RM was a symbol of their financial failure.
Any issues over cheating your children out of the value of your home has been mostly ignored. Your children have homes of their own and probably don’t want yours anyway. Usually, there will be equity left to give them a token gift referred to as their inheritance — free money they didn’t earn and probably won’t use up responsibly. From my point of view, they can do without the Lamborghini they would buy with your money. What they think about you personally probably won’t depend on the size of their inheritance.
People entering those portals now are entering with a new set of regulations in what is called “financial assessment”. Not all will enter now but most enter and are benefited by pouring new concrete over an old financial floor. The evolving process does more to solidity the security of the plan than it did before and for many in the future, financial relief will be found in the establishment of a HECM mortgage.
Now I promote a more positive focused view of the financial side of retirement. The reverse mortgage can be a helpful tool in restructuring retirement finances and it does not have to be a bailout to make sense . Today’s focus is hoping you see the wisdom of OZ in preparing more adequately for retirement income. (Most of you already have in you the wisdom to promote your own financial goals and benefits. It’s OK to believe what you want about a reverse mortgage. (I did)).
Some are now promoting the idea that home equity can be wisely treated along with other assets to balance out the need for a thriving retirement. Another generation will record the results of that plan for retirement wisdom. If I am still alive when that happens, I will probably be a part of it. In the meantime, I assume the position of financial planner to those who don’t know what that is and I have only the credential of experience to promote it now.
I hold up for your scrutiny the ones that did work — as I transition a bit to tout the ones that work for you.