Changing the Role of Home Equity

Posted July 15, 2009 by greggulliford
Categories: General, Reverse Mortgage Industry

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j0440988I recently have read a the results of a study issued by MetLife and the National Council on Aging called Tapping Home Equity in Retirement. The purpose of the study was to examine the different options for using home equity in responding to new retirement realities. The study comes from the consumer perspective and the role that home equity is having on retirement. As retirement resources have changed, due to recent economic conditions, this report analysis their findings and provides legitimate opportunities for many retirees when evaluating their retirement resources. As the Baby Boomer generation matures and swoops into the retirement scene, home equity may become a very good option for security during this time period. On the other hand, if used unwisely, without proper counsel, it could become a source of financial insecurity, according to the report.

The study breaks down the market into four different groups: 1) Affluent, 2) Middle Income, 3) Poor. Each demographic is impacted differently in their use of equity in retirement, and each has different implications.

For financial planners, CPA’s, attorney’s and other professionals who deal in the retirement market, this report is thorough. It really is a must read as we all work to educate, inform, and provide guidance into the financial world.

Tapping Home Equity in Retirement

Cash is King for Seniors

Posted June 24, 2009 by greggulliford
Categories: General, Reverse Mortgage Details

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j0433118I love the phrase “Cash is King.” Who won’t accept cash? I suppose some would prefer us to use credit so they can increase profits, but the bottom line is, having cash puts us in a position of power. It holds much value, especially in an economy that we are in today. Cash is King!

When you think about it, reverse mortgages are simply a tool that will allow those 62 or older to receive cash by simply leveraging ones home. No risks, no losing your home to the bank, no payments, just plain “risk free” cash (Yes, Cash is King)! In fact, it can provide a guaranteed source of income for as long as you live in your home. How many of us prefer cash over credit? But when cash flow is limited, sometimes we make do with credit. This can be a short term solution, but a long term disaster!

Leveraging one’s home in order to access cash is the primary purpose of reverse mortgages. It simply is choosing to use the equity to secure interest payments so that you can use the available equity for life’s needs or desires. This is cash flow at your fingertips! No hassle, no worry, no fear . . . . just freedom!

Reverse Mortgage Testimonial

Posted June 15, 2009 by greggulliford
Categories: Uncategorized

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Home Equity: A Strategy for Improving Cash Flow

Posted June 10, 2009 by greggulliford
Categories: General

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j0403058After spending a lot of time talking with many financial advisors over the years, one of the key barriers that prevent them from looking into a reverse mortgage for their clients was the idea that they didn’t believe using home equity was a viable solution for financial planning, or more specifically improving cash flow. Specifically, the organization that moniters compliance for financial advisors (Financial Industry Regulation Authority) has kept a close watch on the industry and how they use home equity. It is my understanding that they are particularly interested in preventing the use of home equity funds for investments, which makes sense. With poor investment strategy, this could be a nightmare for all parties involved.

However, it is becoming more and more of an option today for many advisors to seriously consider the power of reverse mortgages as a method to provide the cash flow in longevity planning. Retirement is changing today. Many (including myself) are looking at the very real picture of “retirement” and realizing that we may need to reconsider how this time of life will really look. In all reality, the working years may be prolonged as the need for cash flow increases in light of the recent market deterioration.

Financial Planning magazine, in their May 2009 issue, has an article titled From Irrational Exuberance to Unreasonable FEAR. In the article, which is really a roundtable discussion among several financial advisors, they discuss how retirement is changing and how creative measures, including reverse mortgages, are certainly a viable option to consider when looking for cash flow during the retirement years.

It is my belief that reverse mortgages are at the cusp of entering into more of a mainstream product. Much different than the current “last resort” product.

Living the Dream . . . No Mortgage Payment

Posted June 2, 2009 by greggulliford
Categories: General

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42-15717839I remember as a young lad hearing about mortgage burning parties. It was the dream at that time. . .  to pay off the home prior to retirement and have no more mortgage payments. Today, though many in the younger generation have attempted to use home equity as leverage in creating wealth, seniors are continuing to live with the goal of paying off their home during or prior to retirement. This frees up cash so that they can afford to live a relatively similar standard of living in retirement as they had prior to retirement.

Reverse mortgages provide yet another option: Instead of waiting to payoff the last bit of mortgage balance, it allows them to take advantage of the freedom of having no mortgage payment . . .  gauranteed for as long as the home is the primary residence. In addition to having no mortgage payment, it allows them to use whatever is left over, as an emergency fund to take care of any of the surprises that life throws them.

For those who don’t have critical plans for the use of their equity after they pass, a reverse mortgage allows the benefit of realizing no mortgage payment coupled with a stash of cash to be used at the discretion of the homeowner. What a great alternative!

Edu-selling . . Reverse Mortgages

Posted May 20, 2009 by greggulliford
Categories: Uncategorized

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j0438494Looking back over the past four years in selling this product, Reverse Mortgages, it has been an interesting ride. Fulfilling . .  absolutely . . . Easy . . . “NOT”. This is a product that over the years has received much criticism. There are several reasons for this:

1. The Name: I am sorry, but I wish they would have come up with a different name for this product.  Anything dealing with finance that has the name “reverse” in it subconciously for all of us, doesn’t seem right. Going backwards isn’t where most people want to go.

2. Home Equity as a Source of Cash Flow: One of the reasons many financial professionals have not come on to the reverse mortgage is due to the fact that they have always been trained to not use home equity as a source. A few years ago there was an idea out there that many took advantage of with their home equity . . .  cashing it out and using the funds for iinvestments. Ouch . . . though in the roaring ’90’s this made some sense for many, the current financial crisis has shown the reality of what happens when we do this. Foreclosures are at an all time high. Reverse Mortgages are different . . . very different.

3. Misunderstood: Certainly the name, as mentioned on #1 has made reverse mortgages misunderstood, but the original reverse mortgages (back in the 50’s & 60’s) did not have the protections in place as the Home Equity Conversion Mortgages (HECM’s). Areas of misunderstanding include ownership, default scenarios, depletion of equity, and others. Today’s product has many protections for the homeowner as well as their estate.

4. Audience/Market: Because this product is solely for seniors, it has been difficult getting in front of the masses of seniors. We all know that seniors are often taken advantage of and they know it. Anything that sounds too good to be true, well, is often too good to be true. As a group, it is difficult to develop the trust needed with this audience to truly educate and build the relationship. It simply takes time!

5. Lastly, but there is probably more to add, is the SALES PROCESS. The foundation of this product is that it is much different than many other products. I call it EDU-SELLING. That is, educating the client so that they can make the best decision for themselves in their current situation. The educational process is the sales process. Once the product is understood, then if it accomplishes the goals of the client, they make the decision. This is too important of a transaction for the typical sales process (I call it hard selling) to be used. Today, many brokers use this method since it is what they know.  I believe that when the hard sell is used, it is felt by the client, and they turn and run the other direction.

In the end, the client wants to know that the sales associate is one who can be trusted and who gives the clients room and time to process. Edu-selling provides the clients with information that they need to make the right decision for them. Sometimes it is quick, but often times it takes months for this process to occur. But in the end, these are clients that are happy with their decision.

Reverse Mortgages: The Future?

Posted May 19, 2009 by greggulliford
Categories: General, Reverse Mortgage Industry

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j0433797If you have been one to follow the reverse mortgage industry over the years, you have seen a lot of change. For the first 15 years of the HECM product, there was virtually little change. The product was what the product was. HECM150 was basically what was sold as the main product throughout the country. Today there is change what seems to be every week. With the economic issues that our country is facing, the industry has been required to change.

Dennis Haber an attorney that has focused on the reverse mortgage industry and has been influential within this industry. He has written a couple of blogs that draw attention to the current and pending situation around the reverse mortgage product and is an advocate for the industry. Here, he explains what he calls the Reverse Mortgage Storm, Hurricane 1 & 2:

The Reverse Mortgage Storm, Hurricane 1

The Reverse Mortgage Storm, Hurricane 2