Archive for March 2009

4 Year Anniversary . . . Reverse Mortgages

March 30, 2009

mcj0439594000011This week I celebrate four years in the Reverse Mortgage industry and wow has it changed! I realize that four years isn’t a super long time as there are some people out there that have been doing it for 3 times that. But even in four years, the industry has grown, the product has changed, and the momentum is big. So big, that it is my opinion that we are nearing the tipping point in this vast market. Here is why:

1. Financial Planning Tool – among many (but probably not a majority), reverse mortgages have become a common topic of conversation. Clients are asking about them. This will grow as financial planners realize that this tool has a place in financial planning. Even now, though, there is a huge misunderstanding among many financial advisors as to what a reverse mortgage really is and what it can do.

2. More lenders – When I started just four years ago, there were only a few lenders that did reverse mortgages to any extent. Today, there are many more lenders who have entered the market. The competition is fierce.

3. Interest Rates – for the first15 years, reverse mortgages had a common spread of 1.5% and basically three different products: monthly adjustable, annual adjustable, and a Fannie Mae proprietary product. Today, we have live pricing with basically two different index rates, jumbo products (though today these are rarely offered; they will come back as the market improves), in addition to the annual adjustment rate product.

4. Marketing – Even four years ago you never heard anything about reverse mortgages. Today there are articles, advertisements, TV Ads, and radio ads running all of the time. It is becoming common language, but still very misunderstood.

I must say that even as the market and industry have grown, this is a fun place to be. It provides solutions for those who had no where else to turn. In doing four years of work within the industry, I do take some pride in the fact that I have not talked to any of my past clients who regretted their decision. They are now living in financial freedom that they have come to enjoy!

Financial Planning – Plan B

March 27, 2009

42-15717826Recently I have been meeting with several financial advisors, many of which have not considered a reverse mortgage for their clients. It certainly makes sense that the profession has rarely looked to home equity as a source of financial planning. In fact, I am well aware of the compliance issues that are there for advisors. Many of which are based on the old view of investing equity. . .  never a good idea. However, in my conversations with experienced advisors, they are beginning to see the opportunity for their clients. It often is seen as Plan B. With portfolios deteriorating 30-40%, the reverse mortgage is a great Plan B. There may not be enough time to wait until the markets fully re-establish themselves.

The biggest concern that I’ve seen among these financial advisors has been the risks involved with reverse mortgages. These risks are virtually gone. The biggest risk being that the borrower needs to be aware that there may not be any equity left at the end of the reverse mortgage. Being that they can never owe more than the value of their home (FHA Mortgage Insurance covers this), their heirs and estate are protected. With a lot of guarantees, this program is definately something to learn more about.

I’m Back!

March 26, 2009

j0409123Wow . . .  it has been a while since I have posted anything on this site. The discipline of it all just became a little overwhelming when networking became more of a priority. For all of my readers, I am sorry.

Reverse Mortgages have become more and more of a solution, really a Plan B for many folks now that there retirement funds have dropped 30-40%. I will continue to give some insight as to what is happening in the industry and share experiences that may shed some light into this program. I look forward to sharing . . .

Being in the industry for over four years now I have seen a lot. Today reverse mortgages are really at the tip of becoming a common conversation among retirees. Product changes, lending limit adjustments and the overall success of millions of Americans who have reverse mortgages have brought this financial tool into the limelight of financial planning.