The Role of Home Equity Conversion Mortgages in Retirement Funding
Susan A. Pomfret - USA Mortgage
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Mar 26, 2024
Florida - Southwest
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Susan A. Pomfret RICP®️
According to the National Reverse Mortgage Lenders Association (NRMLA), homeowners age 62 and older had housing wealth over $13 trillion. This wealth is not liquid. It’s locked up in home equity at a time when older Americans are looking for ways to fund their retirement. Home Equity Conversion Mortgages (HECMs) are one way to unlock this money, and financial planners now consider them an integral part of financial planning for retirement.
What
Is a HECM?
A
HECM allows homeowners 62 and older to access a portion of their home equity to
use in retirement. Reverse Mortgages are available in certain states for those
55 and older and offer higher loan amounts than HECMs.
Retirement Income Planning Basics
A secure retirement income plan should meet your financial goals and address retirement risks. Financial goals may include a source of income, paying for contingencies, and leaving funds for your heirs. Retirement risks may include longevity, inflation, healthcare costs, the need for long term care, the sequence of withdrawal of your funds from your available sources, and changes in public policy. A financial planner can help you develop a plan to address these issues, and a HECM can be an important part of your plan.
Ways
to Use a HECM in Your Financial Plan
The proceeds from a HECM can be used in any way you wish. Once the HECM has paid off your existing mortgage, a financial planner can help you set priorities for the way you spend these funds, such as:
•
Fund home renovations to age in place
•
Purchase a
new home (HECM or Reverse for Purchase)
•
Spend home
equity first to leverage investable asset growth potential
•
Coordinate
home equity to mitigate sequence of returns risk
•
Use tenure payments to reduce portfolio withdrawals – perhaps to
keep them at a
•
sustainable level (4-6%)
•
Use tenure payments as an annuity alternative
•
Delay your Social Security
•
Manage your tax bracket
•
Manage a Roth conversion
•
Pay for long-term health care
•
Fund end-of-life care
•
Protect your home’s value
• Create a contingency fund
If you are considering a HECM as part of your retirement plan, it’s important to remember that the amount you can borrow is determined by the age of the youngest borrower, the interest rate, and the appraised value of the home or maximum claim amount, whichever is less. Also, you’re responsible for property taxes and homeowners’ insurance. Finally, you must continue regular maintenance and make necessary repairs to keep the home in good condition.
If you have additional questions about HECMs or Reverse Mortgages,
I'm here to help. Call me today for more information about this retirement
income option. 401-595-7300.
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Local Services By This Author
Susan A. Pomfret RICP, USA Mortgage
Reverse MortgagesAt USA Mortgage, we are passionate about helping seniors achieve financial flexibility through Home Equity Conversion Mortgages (HECMs) and other Reverse Mortgage solutions. With a customer-focused approach and over two decades of experience, we provide tailored mortgage options designed to meet the needs of homeowners aged 55 and older.Our dedicated local Team are experts in HECMs/Reverse Mortgages, guiding you every step of the way with a seamless loan process. Whether youre looking to access your homes equity, refinance, or explore a HECM or Reverse for Purchase option, USA Mortgage offers a wide range of solutions to help you reach your financial goals.We pride ourselves on delivering a reliable, detail-oriented, and personalized experience. From the initial consultation toloan closing, our Team is committed to finding the right product that works for you, providing peace of mind and financial freedom. Trust USA Mortgage to be your premier home loan partner, empowering you to make the most of your retirement years.We offer a wide range of mortgage options to suit your specific needs and financial goals. From conventional loans to FHA, VA, and USDA loans, HECM and Reverse Mortgage loans. USA Mortgage has the expertise to help you find the perfect mortgage solution. Susan A. Pomfret, RICP has a career spanning several decades, she is proud to be one of the trailblazers in the reverse mortgage industry, having the honor of originating one of the first HECMs in Rhode Island in 1989 and has since dedicated her career to advancing the industry, playing a pivotal role in elevating companies to new heights. Under her leadership, she has transformed HECM closings, overseen vast teams, and engineered sales strategies nationwide.Susan's passion extends beyond just professional accomplishments; she is deeply committed to the senior community. This is reflected not only in leadership roles within senior-focused non-profit organizations but also in the dedication as a volunteer and advocate. She has been published in numerous mortgage publications, covered esteemed events like the White House Conference on Aging in 2005 and 2015, and was chosen to assist in writing the first Certified Reverse Mortgage Professional (CRMP) exam for the industry's trade organization, the National Reverse Mortgage Lenders Association (NRMLA).In addition to Susan professional endeavors, she holds a Bachelor Degree in Paralegal Studies, a Certificate in Gerontology from Roger Williams University and the Retirement Income Certified Professional Designation from The American College of Finance Services. Susan is driven by the mission to enrich the lives of our senior population and empower retirees to live a financially stress-free retirement.Contact Susan Pomfret, RICP at 401-595-7300 to schedule your free consultation.NMLS#1253876. Licensed in FL (License #LO125044)