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5 Straightforward Ways a HECM Can Ease Retirement Risk
Jack Guttentag, better known as ‘The Mortgage Professor’ explores several ways that a Home Equity Conversion Mortgage can help ease retirement for today’s older homeowners. Guttentag’s article balances consumer education with the possible strategic uses of a reverse mortgage with five possible applications.
While numerous national publications have espoused the strategic use of a HECM line of credit to prolong investor’s portfolios the classic uses of a reverse mortgage also hold promise for older homeowners.
1. Conversion. It’s no secret. Far too many older homeowners carry a mortgage into their retirement years, often beyond their life expectancies. The burden of monthly mortgage payments is especially problematic for retirees on a fixed income wrestling with increasing living and healthcare expenses. Paying off one’s existing mortgage and refinancing into a reverse mortgage provides increased monthly cashflow and peace of mind for many. In his example the Mortgage Professor shows the typical mortgage balances that can be paid off by age and home value. Keep in mind these numbers are based on today’s low interest rates.
2. Postponement. Too often many seniors take Social Security as soon as they are eligible for payment. Guttentag writes “For most seniors, waiting until age 70 before collecting social security, as opposed to taking a smaller amount earlier is an…
Download a transcript of this episode here.
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