Forbes: Reverse Mortgage for Home Purchase Can Save Retirement

There are only 21% of workers who are very confident that they will have enough money to live comfortably during retirement and over half of Americans have been labeled “at risk” of not being able to keep up with their lifestyle expenses in retirement, according to EBRI, cited in a recent article from Forbes.

But, there are options to secure retirement, including paying off a mortgage early, moving in with other family, downsizing, or even using a reverse mortgage, according to the article contributed by Scott Spann, a certified financial planner at Financial Finesse, a financial education company.

“A home equity conversion mortgage, or reverse mortgage, is a type of mortgage that allows homeowners to borrow against the equity in their primary residence,” Spann writes. “They differ from a forward mortgage in that no monthly payments are required. For this reason, reverse mortgages provide a potential way to buy a lower cost home or one that is more suitable to your retirement lifestyle with no monthly payments.”

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Though the article does not mention that with a reverse mortgage, borrowers must keep up on other household expenses such as taxes and general upkeep, it does provide a link to learn more about a reverse mortgage for purchase.

The solution of relocating to a foreign country in retirement, or purchasing an RV to travel the country or boat to live in, are other ways the article shares how retirees who are strapped for cash may be able to save money in retirement.

Read the full article from Forbes.

Written by Alana Stramowski

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  • Once again, this type of press, like in Forbes that Alana points out in the article is what should be encouraging to all of us.

    We have never had such positive press as we have over the past year. Sure, we have problems to over come in our industry, endorsements are down, regulation changes coming at us ETC.!

    However, we have to look at all the positives and capitalize on them. I have all my life tried to look at the positives, sure I study the negatives but a greater percentage of the times, I have found that the positives out way the negatives! This has always kept me going and I have been successful looking at it that way.

    Thanks for the article and pointing out Forbs views on our product Alana!

    John A. Smaldone
    http://www.hanover-financial.com

    • John,

      It truly would be great if more than 7,000 people had even visited the website to read the article.

      Some might rightfully conclude by the numbers visiting the Forbes webpages where the positive stories about reverse mortgages are being posted that Forbes readers have little, if perhaps no interest in obtaining reverse mortgages.

      With such low visitor numbers, those reading the articles may be limited to the over 690,000 HECM borrowers with active HECMs and members of this industry. Perhaps this explains in part why we have much better press yet we are still waiting for the results in better endorsement numbers.

      I am a bottom number kind of guy. Even if sales are up, my mantra is how are profits or even if spending is down, how are things in respect to targeted goals and objectives.

      Right now is the time to figure out why if the environment seems so conducive to much higher endorsement numbers that we do not see much higher endorsements? While a lot of the problem lives at the door of far too much overkill in rooting out those who would default on property tax and insurance obligations on HECM collateral, are we fooling ourselves about so much great press when so few are reading “these great articles” and similar indicators of a good growth environment.

      So if you ask me, the press environment is not bad, it is lousy since so few are even visiting the websites on which they are found. So how are we going to turn that around?

      Despite all of the naysaying about celebrity advertising, Tom Selleck is proving those conclusions to be very, very questionable. Hopefully these ads are not only ramping up endorsements for AAG alone but the industry as well will experience the adage: “a rising tide lifts all boats.”

      Our product is still strong; we just have to figure out how we can pragmatically make an effective case to the seniors who will 1) qualify, 2) prudently benefit from the origination and 3) then originate. Unless all three are there, we may get some help in increased endorsements in the short run but in the long-term HECM endorsement numbers will once again disappoint.

      I hope you are enjoying your weekend.

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