What is a Reverse Mortgage aka Home Equity Conversion Mortgage—an interview with Don Graves

Get the full transcript and slides to this interview here on RetireWire.com:

https://retirewire.com/what-is-a-reve...

Or the podcast version here https://podcasts.apple.com/us/podcast...

So just what is a reverse mortgage and how does a reverse mortgage work? Well, more technically referred to as a home equity conversion mortgage, Don Graves discusses what they are and how they work.

The term “reverse mortgage” has been known to make retirees cringe at its mention, yet Don Graves, president and founder of HECM Institute for Housing Wealth Studies, says a reverse mortgage can serve as a valuable additional stream of income during the decumulation phase of life.

If there were a proven resource that allowed you to increase cash flow, reduce your risk, preserve your assets, enhance your liquidity, and even add retirement dollars back into your savings account, wouldn’t you be interested?

Don joins the Wealth Summit to show you how to utilize the reverse mortgage to accomplish these retirement objectives.

KEY POINTS
-What is a reverse mortgage?
-How does a reverse mortgage work?
-Home equity conversion mortgage synonym
-Who can qualify?
-How much money can you get?
-How do you get the money?

Widely known as a home equity conversion mortgage (HECM), a reverse mortgage is a federally insured home equity loan that allows those age 62 years or older to convert a portion of their mortgage to tax-free money.

As the life expectancy of humans continues to increase, the initial 3 buckets of money—social security or pension income, investments, and insurances— aren’t lasting long enough to sustain the retired lifestyle many want and planned for.

The reverse mortgage adds an extra asset retirees can draw money from to supplement their other 3 streams of wealth.

To qualify for an HECM or reverse mortgage, you must be at least 62 years old and the house must be your primary residence. Additionally, you must take a financial assessment test to make sure you have good credit and enough money left over at the end of the month to cover property-related expenses.

Once you get the loan, you must maintain the upkeep of the house, hazard insurance, and pay property-related taxes.

The amount you receive depends on a triangle of factors: the age of the youngest borrower, the value of the property, and the interest rate. A typical 62 year old is eligible for about 50% of the value of the home, up to a home value of $636,150.

This low interest rate environment we’re experiencing currently gives you more money with less interest, as opposed to a high interest rate environment which means more interest and less money. So if you’re considering taking the reverse mortgage route, now is the time.

It’s important to receive the money in the manner that suits your situation the best. It can be distributed in a lump sum or through a line of credit. You can also get monthly tenure payments, which lend a certain amount of money every month as long as you live in the house, or you can elect to receive monthly term payments, which distribute a certain amount of money for a select period of time. Finally, you can choose a combination of the two monthly payment options.

Unlike many common misconceptions, a reverse mortgage doesn’t mean you lose your home. The government doesn’t want your house—just repayment of the loaned money when the house is sold.

The proceeds offered by the HECM’s line of credit give you an additional stream of money that will help you enjoy retirement the way you always planned.

So do you STILL think reverse mortgages are bad? Will you consider a home equity conversion mortgage for your retirement plan? Let us know below!