U.S. News: Reverse Mortgage Turns Home Into Pension

reverse mortgage annuityAn article published by U.S. News points out the merits of using a reverse mortgage like an annuity or pension plan to supplement retirement income.

The author Philip Moeller, makes the point that, “Most surveys project baby boomers will face serious financial shortfalls in their retirement years. Accessing home equity in a safe and predictable way is often held out as one of the few ways consumers can add additional income in their retirement years.”

Not Chosen By Many

The tenure payment option available for FHA insured HECM reverse mortgages has always been available, but not widely used. Reasons for this could be due to various factors that were not pointed out in the article.

1. Many folks that obtain these loans need to pay off large existing mortgage balances and require most or all of their qualifying proceeds, leaving little or nothing to distribute on a “tenure” basis.

2. The U.S. News article quotes one lender as basically saying that “other” lenders (not him of course) are more interested in higher loan amounts at closing (inferring higher commissions) rather than emphasizing the merits of the tenure plan. I personally find this inference to be completely disingenuous and frankly insulting, having worked with many reverse loan originators, who customarily put their clients’ best interest before their own paychecks.

Read the complete U.S. News story here and see if you agree that a reverse mortgage has a place in prudent retirement planning.

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