Far too many individuals and families turn a blind eye to their home equity when planning for their cashflow needs in retirement. It is a shame, because cashflow is the name of the game in the retirement years, and a great way to maximize it is through leveraging a reverse mortgage (RM). There is nothing to fear but un-truths that we mistake as absolute truths. The best parts are the reverse mortgage leaves you (and your spouse) in your home until you choose to move or you both pass away and the cashflow you leverage is non-taxable. Not to mention, the mortgage lender and the Federal Housing Authority (FHA) are now the liability holders. You can’t lose with a RM. You have tax-free income; no one has the right to make you leave; the cash you leverage has the ability to continue to grow; you don’t need to make payments; your heirs have options when you pass and much more.
In his book, Home Equity and Reverse Mortgages, The Cinderella of the Baby Boomer Retirement, Harlan J. Accola, asks “would you like have more cashflow in retirement, pay lower income taxes, and have a higher net worth and thus a greater legacy to pass onto your heirs?”
Unlike a cash-out refinance or home equity line of credit (HELOC), a home equity conversion mortgage (HECM) does not have a payback schedule and cannot be “called back” for any reason whatsoever.
Accola goes on to write, “…sooner or later, our house will be liquidated and denominated into dollars, just like our IRAs.” When financial planning, homeowners who have spent years and tens of thousands of dollars building up the value of their asset called a home, they should explore the benefits of this bucket of money as, at the very least, an emergency fund, and at the very best, a way to safely stay in your home mortgage payment and income tax free while enjoying the fruits of your labor. A reverse mortgage aligns with Bryan Bloom’s focus on the distribution side of things and not on the accumulation side that traditional financial advisors focus on
Dan Hultquist, bestselling author of the book Understanding Reverse 2020, began his career in the mortgage industry as a traditional lender, though while he was providing financial counseling to homeowners during the 2008 housing crisis, he had a career and mindshift to the reverse mortgage side of the house, because he had “never seen a financial product that could do so many things” for its owner.
Check out my conversation with Dan below:
