News by Subject
Complete list of specialty news sections.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Mortgage Industry News
Subscription-based news for people who work in real estate finance.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from

Mortgage News Reprints
Put entire stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed stories for your web site or for your RSS reader.

News Archives
Archive of news entries.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Graphs
Directory of lenders, branch operators and mortgage service providers.
home advertise email RSS about us
HOT Topics Rates Glossary LO License Search
Consumer Mortgage News
Free mortgage news for current and prospective borrowers from a leading online mortgage industry news publication.

Reverse Mortgages as Part of Retirement Strategy

For some, reverse mortgage is a retirement tool

March 13, 2017

By JANET KIDD STEWART Tribune News Service (Tribune News Service)

Financial planners, who once disparaged reverse mortgages, are beginning to recommend them for clients as a proactive retirement income strategy, rather than a last-ditch effort to remain in a house.

The loans for seniors age 62 and up can help individuals and couples avoid portfolio withdrawals when stocks are down, buy a new home for retirement, or create an income bridge between early retirement and the start of Social Security benefits.

And because borrowers can choose to pay down the mortgage, resulting in a mortgage interest tax deduction, they can even help offset taxes on required minimum distributions from retirement accounts that must begin after age 70.

Marie and Jerry Watson used one last fall to buy a home in Florida. At age 64, Jerry had recently down shifted from military and corrections careers in Alaska and was moving into part-time teaching roles. Both he and Marie have adequate retirement funds from their careers, including Jerry's military pension, and won't need to count on home equity if one of them has to move to a nursing home, he said.

So they put about $247,000 down on a roughly $500,000 home in Lake Wales, Florida, using the Federal Housing Authority's reverse mortgage program, known as the home-equity conversion mortgage, or HECM, program.

Borrowers can also take annuity-like equity payments, called tenure, over their lifetimes or establish lines of credit, among other HECM options.

As long as they maintain the property and stay current on property taxes, the Watsons don't owe payments on the home. When they move or after both spouses pass away, the loan and the accrued interest is repaid, with any remaining home equity going to the homeowners or their estate. If the amount owed is greater than the value of the home, the lender takes the home but the estate is not charged more than the home value. (Check out the National Council on Aging website,, and

"It took a lot of pressure off of us," Jerry Watson said. The loan allowed the couple to buy their dream retirement home on a golf course, essentially doubling their budget without worrying about monthly mortgage payments, he said. "It was like going to a car dealership after saving up for a Kia and learning you could drive home in a Cadillac."

While the strategy is working for the Watsons so far, it's important to understand the risks and the costs.

Chris Bruser, with Retirement Funding Solutions LLC, sold the reverse mortgage to the Watsons, but has warned others it might not be right for them. Someone with few assets outside the home could exhaust the equity early, and if the homeowner falls behind on taxes or upkeep, they could face eviction.

"Unfortunately, if someone is already in crisis mode, I can't really help them," Bruser said.

The psychology of the transaction is also important, said Jonathan Guyton, principal of Cornerstone Wealth Advisors in Minneapolis. Think of reverse mortgages as a defensive strategy for your overall retirement plan, he suggests. That could mean buying a retirement home with half the assets you might otherwise commit to housing and investing the difference, or securing a line of credit that grows with inflation over time and can act as longevity insurance.

"It's important for retirees to understand why they are purchasing these and what they are paying for beyond what is accomplished with a traditional home equity line of credit," he said. "Imagine what a pre-retiree hears if their adviser says something like, 'Your retirement still looks really solid, but we think you should put a reverse mortgage in place just in case that ever changes.'"

Fees, closing costs and mortgage insurance can add up to several thousand dollars on a typical loan, not to mention the accruing interest and ongoing mortgage insurance premiums of 1.25 percent annually. Paying those fees can be worth it to ensure a senior can remain in a home, Guyton said, but might be less so if the goal is simply enabling more discretionary spending.

"The environment has changed pretty considerably" regarding reverse mortgages since federal regulations over the last few years expanded how much homeowners could borrow, cut some of the fees and bolstered consumer protections, said Amy Ford, NCOA's senior director of home equity initiatives.

But there are still risks, and the group encourages people to ask a lot of questions during the required counseling sessions that borrowers must participate in to complete the loan process. "Seniors who burn through that equity too quickly could find themselves in a difficult position," she said.

About the Writer
Janet Kidd Stewart writes The Journey for Tribune Content Agency.

e-mail writer:

next story

back to home page

Copyright (c) 2017, Tribune News Service

Distributed by Tribune News Service.

This story was distributed by TNS - Tribune News Service
Refinance News
News about refinance programs, pricing and production.
H A R P 2.0 News
News stories about the H o m e Affordable Refinance Program including expanded program guidelines.

Copyright © 2016 Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

pricing engine directory

wholesale lender directory

More Mortgage News Resources ( full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

free mortgage news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter


mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

refinance news

reverse mortgage news

sales blog

secondary marketing

servicing news

subprime news

wholesale lenders

wireless mortgage news