News Segment Cites “Very Competitive” HECM Interest Rates

Barry Armstrong, a financial planner with Securities America, recently appeared on NECN to answer the question, What is a reverse mortgage?

“It’s a mechanism that allows people to continue to live in their home, where they raised their families, and where the wanted to retire, and they are able to take equity out of their home in three different ways: they can get a line of credit, they can get a lump sum to pay off some existing bills, or they can get a monthly annuity payment from their home,” Armstrong explained.

He went on to say that reverse mortgages have gained strength during the past five or six years as a result of the poor economy, and cited a story of a widow electing to take out a reverse mortgage rather than sell her home after all her savings had been exhausted on her late husband’s health care. “That’s a good use of the reverse mortgage,” he said.

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However, he added that it would be a bad use of a reverse mortgage to spend the money frivolously or on vacation plans, or if the borrower still had money in a 401(k).

“It’s really meant, in my perspective, as a last resort; when you run out of money, you use a reverse mortgage,” he said.

Armstrong called interest rates on reverse mortgages “very competitive,” and also mentioned a recent development that has served to cut down on closing costs: the introduction of the HECM Saver Program.

“It basically made the cost of a reverse mortgage about equal to refinancing your house on a traditional mortgage. The high cost associated with a reverse mortgage has gone way down,” said Armstrong.

View the video.

Written by Alyssa Gerace

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  • Meet Mr. Armstrong.  He is an example of two things:  1) our need to continually reach out to opinion makers and 2) how poor our “education” really is.
     
    Mr. Armstrong is an opinion maker.  He has several securities and insurance licenses.  He needs to be properly educated about reverse mortgages.  He is not a novice to the broadcast industry so his hesitation and incorrect assessment of the product has less to do with nerves than his misunderstanding of the product.
     
    Mr. Armstrong and his staff at the Armstrong Advisory Group in Needham, MA are prototypes of those we need to reach.  We need to be less concerned about cross-selling issues and go out to meet with these individuals than helping them meet the needs of their customers as described in his interview. Cross-selling certainly could raise its ugly head but that is another issue whose definition is highly dependent on which state the prospect has his/her principal residence.  The federal rule is far less egregious than the rules in California, for example where things may get far worse before they get better. If you are excessively worried about cross-selling, meet with an attorney, CPA, or fee only CFP.
     
    Now let’s look at the fruit of the education labor someone has put in to Mr. Armstrong.  He is a financial professional; yet look at how he messed up in parroting what he had learned.  Over the last two years several on this website have fiercely defended or with great hubris pontificated how all of their borrowers were educated and know all there is to know about reverse mortgages because they taught them.  Beware the lesson of Mr. Armstrong.  If he does not get it his first, second, or fifteenth time, imagine the memory of your customers.  Age is not kind to short-term or mid-term memory.
     
    The principal lesson from Mr. Armstrong is that meeting with financial advisors even sales people is worth the time.  They will speak out what they know.  They are honest and will try to express both the positive and negative aspects of the product.  BUT they need to know something in a positive way.  Go out of your way and meet some more “financial opinion makers.”  Remember these individuals are opinion makers whether they are on TV or not.

    • Michael,

      It seems Mr. Armstrong is the go to finance guy for NECN.  There is little doubt treverse is right as to bias.

      The real question is why Mr. Armstrong.  He appears to have specialties but he holds no license per the AAG website which identifies him as an independent evaluator or analyst.  The AAG website also does not indicate he is a CFP, CPA, etc. 

      Mr. Armstrong may have competence in choosing certain securities and insurance products, but he does not have the credentials which would indicate any skill in providing ANY information outside of those specific areas.  So unless Mr. Armstrong is the only competent financial person in the region with competent communications skills, it is strange he would be the person they would go to on reverse mortgages.

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