On the way to dropping your child off at soccer practice, your mind wanders to your to-do list for the next day, which looks something like this: pick up your mother’s medication, help make her next doctor’s appointment, and work with your eldest daughter to fill out college and scholarship applications.
Is a HECM Reverse Mortgage a good fit for your retirement?
That is good question to ask and it is hard to determine up front without doing some homework and finding out details about a person's specific situation, but there is more data today from independent resources such as the Journal of Financial Planning that suggest that the Home Equity Conversion Mortgage programs might be better to take earlier in the retirement years versus using it as a product of last resort.
There have been many changes to the Home Equity Conversion Mortgage programs (Home Equity Conversion Mortgages, aka HECM, are the government insured Reverse Mortgage programs and they are the most popular Reverse Mortgage today) since it was signed into law in 1988, but if you or a family member is considering a HECM Reverse Mortgage or one of the Proprietary Reverse Mortgage programs you should talk to a Reverse Mortgage Consultant who specializes in Reverse Mortgages and ask for a Custom Reverse Mortgage analysis to understand how the program works, what fees you would incur and how it will affect you and/or your family.
There are multiple options with Fixed & Adjustable rates with Standard and Low Cost fees for the traditional Reverse Mortgage to Refinance an existing home that is owned by at least one homeowner that is 62 years of age or older.
And for the past few years there has been a New Reverse Mortgage Purchase transaction that allows a person that is at least 62 to buy a home with all the benefits of the Reverse Mortgage. The homeowner(s) would bring in cash or equity from a prior home for their down payment and they can use the Reverse Mortgage to finance the rest o the home purchase.
The Journal of Financial Planning article "Reversing the Conventional Wisdom: Using Home Equity to Supplement Retirement Income" was one of the research reports that documented a major paradign shift in whether a Reverse Mortgage should be used since it showed that a Reverse Mortgage could help families extend their retirement disbursements to avoid "running out of income" by using it strategically near the beginning of the retirement versus using it as a last resort. (http://www.fpanet.org/journal/ReversingtheConventionalWisdom)
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