Robert Klein, CPA is the founder and President of Retirement Income Center in Newport Beach, CA. As a writer and publisher, he brings a holistic approach to retirement planning and presents a five-point matrix to consider with respect to evaluating a reverse mortgage. This comprehensive review illustrates the following factors:
Projected Mortgage Balance
Projected Savings
Projected Net Worth
Projected Line of Credit
Projected Liquidity
Most discussions I have with my client’s financial advisor are regarding the line of credit feature particularly unique to the HECM reverse mortgage. Unused funds grow larger over time for future use, and the growth is optimized by younger homeowners closer to 62 years old. Recent communication with a client revealed that their line of credit grew significantly over the last 13 months. Its beginning balance was over $400,000 and there was no existing mortgage balance on the house when the reverse mortgage loan was created. That line grew an additional $16,000.00 in funds in the same period. No funds had been withdrawn since their closing. This is the perfect strategy for a couple wanting to increase their retirement spending, especially if they also have funds under management.