Research has shown that when using a reverse mortgage in the retirement planning process, rather than using a HECM as a loan of last resort, the HECM significantly increases the likelihood of a retirement portfolio’s success.When it comes to using a reverse mortgage in retirement planning, there are several strategies that make the standby line of credit feature a “must have” in the eyes of financial advisors and their clients.
That’s primarily due to recent Home Equity Conversion Mortgage (HECM) (HECM reverse mortgage)program changes over the last couple of years, now including line of credit increases which have changed the way reverse mortgages should be perceived in modern day retirement planning, says Colleen Rideout, home equity retirement specialist at Retirement Funding Solutions.
Launched in January by former Security One Lending head Torrey Larsen, RFS is a company that has roots in collaborating with financial advisors by showing, through academic research, how a reverse mortgage can help retirees fund their longevity. Larsen was instrumental in establishing the Funding Longevity Task Force in 2013 with reverse mortgage industry veteran Shelley Giordano, now the principal of consulting firm Longevity View Associates.
The Task Force is comprised of distinguished reverse mortgage researchers like John Salter, associate professor of financial planning at Texas Tech University; former Mature Market Institute Director Barry Sacks; Tom Davison, CFP; and Wade Pfau, professor of retirement income at the American College—among others.
Since its inception, the group has produced several studies from its members on the practical use of a HECM, and how it fits, as part of a comprehensive retirement plan. It’s this research that has helped “open up a new strategy” in educating non-reverse industry professionals on the merits of HECMs, says Rideout, who regularly teaches continuing education classes on reverse mortgages in her home state of Colorado as well as nationally.
Earlier this month, Rideout presented at the National Association of Insurance and Financial Advisors (NAIFA) 2015 Annual Conference in New Orleans. Her presentation spotlighted the “must have” reverse mortgage line of credit feature to a crowd of financial planners.
“The line of credit strategies are very basic,” Rideout says. “Once you learn—as an advisor or an insurance agent—how the line of credit works, then you can build other strategies on top of that.”
Rideout’s presentation also examined several different strategies a borrower can use the “standby” line of credit feature on their reverse mortgage to complement other their retirement assets.
Research has shown that when using a reverse mortgage in the retirement planning process, rather than using a HECM as a loan of last resort, the HECM significantly increases the likelihood of a retirement portfolio’s success.
For the HECM nationally, contact Warren Strycker, loan officer NMLS 247179, See contact information in Navigation Bar under “Information”.