As Garcia and Hunter wrote, “when life looks like easy street, there is danger at your door.” A HECM could be an off setting factor for your upcoming unknowns of 20-30+ years away.
Be sure to listen to episodes 9 and 10 of this series for a foundational understanding. If you are 62 or approaching, a Reverse Mortgage, or HECM (Home Equity Credit Mortgage), is the revised financial tool that you owe it to yourself and spouse to review carefully as you would any investment or insurance policy.
In the wild west days of HECM’s, they could be harmful and not a good decision. Today, they are highly regulated with protections and disclosures to protect you.
Dr. Wade Pfau and Shelley Giordano, have written about the benefits of incorporating a HECM for a financially successful retirement.
As I have been thinking through a HECM, it appears a prudent tool when considering what may happen during the next 20+ years when my now stellar vision of life may become a bit clouded.
Approximate Show Notes
3:00 – A refinance strategy comparing to a Fixed 15 or 30 year “forward” mortgage.
4:10- You can pay down a HECM.
4:45 – Spending equity now.
5:14 – Credit Line Options** – Do Not Skip this part. A growing line of credit set up now, i.e. early,
is NEVER re-evaluated, and continues to grow line size.
7:40 – Using as a last resort, when an oldster, is not the most optimum strategy.
8:50 – Start a HECM early and why.
9:20 – Bridging the years before maximum social security awards.
10:34 – Tenure payments- guaranteed lifetime payments.
12:00 – How tenure payments are calculated.
12:55 – How does a HECM show up on your credit report?
13:19 – HECM for downsizing and purchasing a new home. Alternative to paying cash or having monthly payments.
14:33 – Anticipating the (un) expected health events.
15:20 – As an alternative to Long Term Care policies.
18:55 – Grey Divorce – how to navigate divorce in your 60’s. Who stays and who moves? How do you get the spouses equity out while the other spouse stays.
20:54 – Perhaps a better solution to buying out a spouse in divorce.
22:45 – Don’t do this!
23:55 – Once you have a HECM, can you move and rent out your home? What triggers defaults?
26:00 – Begin The Pitfalls and Perils section.
29:00 – Ron’s strongest encouragement for what TO DO.
31:24 – Considering the needs of children and heirs.
32:08 – Another Strong Word of Caution – Do Not Do This!
33:00 – How is a HECM loan officer paid?
– FHA mortgage insurance spread.
34:00- What you must pay each year.
36:00 – How well regulated FHA has made HECM’s to protect borrowers.
Listen to Episode 10 for Ron Heath’s music that moves him, looking back at perspective at 95, and about dying.
More information with expert analysis:
Dr. Wade Pfau – Reverse Mortgages: How to use Reverse Mortgages to Secure Your Retirement (The Retirement Researcher’s Guide Series) (Volume 1) Sep 16, 2016
Shelley Giordano – What’s the deal with reverse mortgages?
What is your reason? Down Load your copy of The Boomer Manifesto Use this to expand your own framework of purpose.