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Baby Boomers are moving into retirement and many of them simply haven’t saved enough


Donna Linton, YourNews contributor

Published 4:40 p.m. ET May 10, 2017 | Updated 6 hours ago

STUART — Baby Boomers are moving into retirement and many of them simply haven’t saved enough. The main asset they have, besides Social Security benefits, is their home equity. It’s reported that more than half of people over 55 have little or no retirement savings. For a lot of these individuals, home equity is going to be the saving grace as the strategic tool in their retirement income planning.

Unfortunately, many people still view reverse mortgages negatively, using old rules and misconceptions. The Home Equity Conversion Mortgage has undergone many changes, especially in the last two years. There are new limits regarding how much one can borrow, stricter requirements to qualify, and greater protections for spouses. It wasn’t until recently that many in the reverse mortgage industry and the financial planning community began to realize that the  program was designed to do more than just solve an immediate financial crisis.

The ability to obtain a reverse mortgage early in retirement, and then access liquid home equity late in retirement, is generally not discussed with prospective clients. Funds in the line of credit give retirees’ confidence that they will be less likely to run out of money, but they can also be used to take pressure off retirement portfolios, delay social security and extend assets beyond what traditional retirement planning offers. Using the reverse mortgage in this way makes it a form of financial planning diversification.

For example, if the value of the home declines, an established line of credit will continue to grow regardless. In this way, the Home Equity Conversion Mortgage can act as a form of insurance against declining home values. Also, the resulting larger line of credit can be converted to monthly tenure or term payments at any time. In this way, the mortgage can act as a form of insurance against future cash flow issues later in life. The reverse mortgage can be used for those with an immediate need, for those wishing to enhance their lifestyle or as part of a comprehensive financial plan. I am happy to discuss which option would be the best one for you. I can be reached at Sterling Mortgage at 772-485-5291.

Donna M. Linton is a professional reverse mortgage adviser with six years experience. She currently works at Sterling Mortgage Services, 100 Albany Avenue, Stuart. Contact her at 772-485-5291.

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