‘Tis the season to appreciate

Happy Holidays!
I just heard a lovely and touching song, “Make Me A Channel of Your Peace” which reminds me of the human phenomena that inspires us during the holiday season. We have an opportunity to dig a little bit deeper and try a little bit harder to just be kind to one another. Parties, perfectly wrapped presents, and bright shiny lights are exciting and celebratory, but to be kind, is simply one of the best gifts of all. The lyrics are about seeking to understand each other rather than be understood, to console rather than be consoled, to forgive rather than be forgiven, and from the bottom of our over flowing and grateful hearts, to share and show love. What a beautiful sentiment.

Housing decisions in retirement — should I stay or should I go?

I’m happy to announce the release of Dr. Wade Pfau’s book on Reverse Mortgages:
How to use Reverse Mortgages to Secure Your Retirement. Dr Wade Pfau holds a doctorate in Economics from Princeton University, and is currently a professor of Retirement Income in the PHD program at The American College of Financial Services. “A rare, unbiased analysis of how reverse mortgages can fit into a prudent regiment income plan form one of the nations leading researchers. Both consumers and financial advisers can benefit form a fresh look at this often-dismissed option” Mary Beth Franklin, nationally recognized expert in Social Security Strategies. If you or anyone you know is interested in reading this book, it would be my pleasure to send a complimentary copy to you.

Buy a Home with a Reverse Mortgage
By Rachel L Sheedy, Kiplinger’s Retirement Report

Most seniors take out a reverse mortgage to help them stay in their existing home as they get older. But Myra Simmons, 67, took advantage of a little-known product: She used a reverse mortgage to finance a new home.

Myra’s 83-year-old husband, Billy, was having trouble using the stairs in their two-story townhome in Fort Meyers, FL. The couple sold their home and used a ‘reverse mortgage for purchase’ to move into a one-story house nearby. “Now, I take what would have been my mortgage payment and put it in savings,” says Myra, who works for the local county sheriff’s office.

The Home Equity Conversion Mortgage (HECM) for Purchase was created by Congress four years ago to streamline home-buying transactions and cut costs, says Peter Bell, president of the National Reverse Mortgage Lenders Association. Before, seniors would buy a new home, incurring closing costs, and then take out a reverse mortgage on the new home, triggering new closing costs. The HECM for Purchase rolls this into one transaction and one set of closing costs.

For there to be equity to cover the accrued interest, the HECM for Purchase requires that you pay about half of the home’s sales price with your own cash. The reverse mortgage picks up the difference. “Essentially, the money you’re putting in is your equity,” says Ted George a certified financial planner in Scotts Valley, CA.

To pay your half, you can use money from savings, the sale of your other house, or a gift from a family member. But the money cannot be borrowed.

Reframe the Game
By Amara Rose, HECM World
Retirement. It’s no longer a “retreat” from life (if it ever was). As we’ve explored multiple times, people are retiring later or downshifting from full time to part time employment, or moving into a consulting role or some other line of work, rather than simply leaving the job market altogether. And those who do fully retire from the work world are still fully engaged in life — sometimes so busy they wonder how they ever fit a job into their day.

Here are some suggestions gleaned from a retirement workshop for how we might reframe “retirement.” Ideas take their inspiration from sports, advertising, and plain old ingenuity.

Reverse mortgage professionals who enjoy creativity, consider these concepts:

• Act 2
• Between Jobs
• Bonus Years
• Continuum
• Creative Aging
• Downshifting
• Encore
• Field of Possibilities
• Growing Bolder
• Inspirement
• Life 2.0
• Living More
• My Time
• Next Chapter
• Next Stage
• Post-grads
• Prime Time
• Protirement
(it’s not for beginners!)
• Rebalancing
• Re-engagement
• Refirement
• Regeneration
• Repotting (in new soil)
• Retreads
• Rewirement
• Sage-ing
• Seasoned
• Success to Significance
• The Creative Age
• The Gifted Years
• Third Half
• Third Quarter
• Unstoppable

‘Tis the season to appreciate.
It has been such a great pleasure for me to associate with each and every one of you this year. Though many changes have taken place by way of HUD/FHA updates to policies, a reverse mortgage still remains a viable financial program with great benefits.

A deep and heartfelt thank you to all of the patient and understanding clients who went through these challenges with us. It is my sincere joy to be involved in this process with you and to witness first hand, the increase in quality of life and peace of mind that the program brings to so many. I’m looking forward to serving you in 2017.

Thank you…

—Cynthia Kee

Ways to use a reverse mortgage

Nine surprising ways to use a reverse mortgage
By Mary Beth Franklin, Investment News

Reverse mortgages allow homeowners age 62 or older who own their home outright or who have a small mortgage balance to convert the equity in their primary residence into a liquid, tax-free asset. Borrowers can take their money in a lump sum or as a monthly payment, or set up a line of credit. Interest accrues on borrowed funds. Unused lines of credit continue to grow at the same compounded interest rate as the cost of money.

Financial advisers who dismissed reverse mortgages in the past may want to take a second look. Consumer protections have increased and set-up fees have been dramatically reduced. Leading researchers believe reverse mortgages could solve some of the income challenges of retirees who saved too little to finance a retirement that could last decades. Click through to find out the various ways to use a reverse mortgage — some of them may surprise you.

1. Pay off an existing mortgage
Using a lump sum from a reverse mortgage to pay off a traditional mortgage balance instantly increases a retiree’s monthly cash flow and reduces portfolio withdrawal needs. “It really improves the odds for retirement success to not carry a mortgage into retirement,” said Wade Pfau, professor of retirement income at The American College of Financial Services.

2. Replace a home equity line of credit
Unlike a HELOC, a reverse mortgage can never be reduced, frozen or cancelled, and there are no monthly loan repayment requirements. A reverse mortgage is not due until the borrowers sell the home, move out permanently or die. The estate or heirs can never owe more than the house is worth, even if it is less than the amount borrowed.

3. Protect your portfolio
“Should your portfolio decline significantly in value, borrow from the line of credit for your needs, then repay the loan when your portfolio recovers,” said John Salter, associate professor of personal financial planning at Texas Tech University. Interest payments are tax-deductible if retirees itemize their deductions on their income tax returns.

4. Fund future long-term care or income needs
A 62-year-old couple with no long-term-care insurance may want to set up a reverse mortgage line of credit. With a home worth $625,000, their initial line of credit at current interest rates would be worth $327,375, according to Tom Dickson, founder of the Financial Experts Network. Left untouched, the equity line would be worth $613,365 in 10 years and $1,149,143 in 20 years, said Mr. Dickson, a co-designer of the reverse mortgage modeling now part of MoneyGuidePro. The couple could tap the loan for future long-term care costs, as long as they remained in their home, or to serve as a deferred annuity if they needed additional income in the future.

5. Create a Social Security bridge
Supplement income with monthly payments from a reverse mortgage either for a set number of years (term) or for as long as you live in your home (tenure). Term payments can provide an income bridge to allow a retiree to delay claiming Social Security until benefits are worth the maximum amount at age 70, said Shelley Giordano, author of “What’s the Deal with Reserve Mortgages?” (People Tested Media, 2015).

6. Manage taxes
Proceeds from a reverse mortgage are tax-free. Tapping a reverse mortgage can decrease withdrawals from taxable retirement accounts, reducing income taxes and the amount of Social Security benefits subject to income taxes. For higher-income retirees, tax-free reverse mortgage payments can reduce their modified adjusted gross income that can trigger higher monthly Medicare premiums.

7. Pay Roth conversion taxes
Sometimes the only thing preventing a retiree from converting a traditional retirement account to a Roth IRA is the amount of income taxes owed on the converted amount. Tax-free proceeds from a reverse mortgage can pay Roth conversion taxes all at once or over several years, reducing future income taxes and possibly reducing future Medicare premiums.

8. Buy a new home
A reverse mortgage can be used to purchase a new home. Rather than using all of the proceeds from a home sale, downsizers can use some of the sale profits and take out a reverse mortgage to make up the balance, resulting in a new home without monthly payments and additional cash to add to savings for future needs or to supplement current income.

9. Gray divorce strategy
Older couples can use a reverse mortgage to divide a marital housing asset in a divorce. In one scenario, the spouse remaining in the home can take a lump sum distribution from a reverse mortgage to buy out the other spouse. In a second scenario, the marital home can be sold and each ex-spouse can use some of the proceeds from the home sale and each of them can get a reverse mortgage to buy their respective new homes, according to Shelley Giordano, chair of the reverse mortgage industry’s Funding Longevity Task Force.