The reverse mortgage, once known as a product for those in desperate financial need, is appealing to a new consumer, according to a recent article by Financial Planning.
“With its reduced fees and the new financial assessment, the [home equity conversion mortgage] HECM is now appealing to finance-savvy homeowners looking for additional tools to utilize in retirement planning,” Toby Dattolo, president of Heritage Mortgage Banking in Morristown, N.J., tells Financial Planning.
The Financial Assessment is also playing a role in the changing profile of reverse mortgage borrowers.
“Reverse mortgages may become more of a retirement income tool and less of a life jacket for house-rich but cash-poor seniors,” Financial Planning notes.
But the product is not for everyone.
“I analyzed whether the clients interested in buying a dream home should use a reverse mortgage or a traditional mortgage or existing assets for the purchase,” says Clarissa Hobson, a financial planner with Carnick & Kubik, personal financial advisors in Colorado Springs, Colo. “I concluded that a 30-year traditional loan would be the most advantageous to their long-term net worth, so they went in that direction.”
Read the article here.
Written by Cassandra Dowell