by: Alison Calamia
January is a good time of year to revisit the topic of financial planning with your clients since most people usually feel some level of spending “hangover” from Christmas.
When looking at the financial planning tools available to your clients age 60 and older, a reverse mortgage might be something to consider in a few scenarios that we’ve seen recently.
Scenario 1 – Client Has Assets, but Needs Extra Cash
There’s a big misperception that everyone who gets a reverse mortgage is financially strapped.
Nothing could be further from the truth.
Many clients who get a reverse mortgage actually have good assets in the form of investments. They may even be receiving dividends from those assets.
But oftentimes, those dividends aren’t enough to live on and the client could use some extra cash.
A reverse mortgage could provide additional cash without having to tap into the principal balance on their investment.
This can potentially provide cash for things like monthly bills, travel or even helping family members with expenses like cars, schools or buying a home.
Scenario 2 – Client is Running Out Of Money
On the opposite end of the spectrum from clients who have good investments and need to supplement for cash flow are clients who don’t have that big nest egg and are running out of cash… and quickly.
We recently did a loan for a widow whose husband died suddenly. She didn’t realize how much debt her husband had accumulated, and with the loss of his income, she was running out of cash quickly.
The last straw for her was an unexpected $10k roof replacement which she simply couldn’t afford.
In her case, a reverse mortgage made a ton of sense.
We were able to pay off her existing mortgage and get her cash for the emergency roof repair, all while freeing up her monthly budget to gain some much needed relief. So instead of pulling from her retirement each month, she was able to let her home’s equity work for her.
In my 25+ years of lending, I’ve had MANY sensitive conversations with my referral partners and their borrowers about money.
Reverse Mortgages can be complicated but when explained properly only then can your clients make an informed decision. Like you, I take time to listen to your clients concerns, wants and needs so that we can create the best plan for them.
Call me for a confidential meeting to discuss your clients scenario and see if a Reverse Mortgage is a right fit for them.