Become a partner.

Become a FAR partner to take advantage of premiere financial products, pipeline management tools, and our signature “white-glove” service to process loans quickly and get your clients on the path to retirement. To begin the new partner application process, please submit your contact information below.










* required

By submitting this request for information, I hereby provide my signature, expressly consenting to receive information by email or phone, via automated dialing systems, texting, and/or prerecorded messages, from or on behalf of Finance of America Reverse LLC and its fulfillment partners and may agree to receive other offers on the telephone number I provided above, including my wireless number, even if I am on a State or Federal Do-Not-Call list. I understand consent is not a condition of purchase and that I may revoke my consent at any time. I can revoke consent by calling FAR customer service at 855-421-4745, or contacting my loan officer.

Join the #1 reverse wholesale lender today!1

Using the reverse mortgage as a financially savvy tool

In the past, people used reverse mortgages as a last resort when they became cash-strapped in retirement. However, with the stock market and US economy struggling due to the coronavirus pandemic, retirees and investors are looking at the reverse mortgage as a financially savvy tool.

“If you are trying to meet a spending goal and assets are losing value, you have to withdraw a higher percentage from your portfolio,” said Wade Pfau, retirement income researcher, and professor of retirement income at The American College for Financial Services.

“By incorporating partial annuity use, having access to a buffer asset [such as a reverse mortgage or cash-value life insurance] and having some capacity to reduce spending, a reasonable withdrawal rate can still be possible and can provide some relief to those approaching retirement age at this unprecedented time,” Pfau said.

Financially savvy investors are using reverse mortgages to protect their investment portfolios, delay social security benefits, purchase new homes, build an emergency line-or-credit (LOC), and more. This article outlines some of the most common ways retirees are using reverse mortgages in their retirement funding strategies to maximize their retirements. Aside from just protecting their investment portfolios, investors are using reverse mortgages for various reasons, including paying Roth conversion taxes, delaying social security benefits, buying a new home, and more.

 

Protect the investment portfolio from economic downturns

One of the most significant risks for retirees is drawing from their portfolio early in retirement during a period of negative returns. Also called sequence of returns risk, selling investments while the market is down will cause the portfolio to deplete at an accelerated rate. Using home equity during these periods of a negative return is a strategy outlined by Dr. Wade PfauDr. Barry Sacks, and Dr. John Salter. Their research states that incorporating a reverse mortgage earlier in retirement, rather than a last resort, can supplement cash flow during down markets. By doing so, investors improve their total wealth and increase the longevity of their retirement portfolios.

 

Pay Roth conversion taxes

Many retirees are converting a traditional IRA into a Roth IRA to pay less income tax during retirement. However, you pay income tax on the contributions when converting from a traditional IRA to a Roth IRA. If you use proceeds from the conversion to pay for the taxes, it can increase your taxes even more. “In the conversion process, distributions from IRAs are taxed as ordinary income, and experts often recommend paying those taxes with funds outside of the IRA, because using money from the IRA for that purpose generates even more taxes,” states Robert Powell, personal finance for MarketWatch. Using funds that are not taxed as income from a reverse mortgage can help pay for these Roth conversion taxes and prevent retirees from potentially moving into a high tax bracket, and possibly paying higher Medicare premium surcharges.

 

Delay social security benefits 

Delaying social security benefits is a way to increase your retirement income in future years. On average, benefits increase 8 percent every year that you postpone filing from age 62 to 70. Many retirees are using a reverse mortgage as an income bridge to meet their living expenses during this waiting period.

 

Increase retirement funds with a growing HECM line of credit

With a home equity conversion mortgage (HECM) line-of-credit (LOC), you only accrue interest on the funds you withdraw. The second benefit is that the untouched portion of the LOC can grow in value. It should be noted that some reverse mortgage products do not offer a growth feature, so you should consult a financial professional to see which solution works for your situation.

 

Buy a new home

Rather than using all of the proceeds from a home sale, downsizers can use just a portion of the sale profits and take out a reverse mortgage to make up the balance resulting in a new home without required monthly principal and interest mortgage payments. The additional cash goes to savings for future needs or to supplement current income.

 

Gray divorce strategy

Gray divorce is a term that describes adults who separate at age 50 and older. This divorce rate doubled since the 1990s’ according to the Pew Research Center analysis of the 2015 American Community Survey (IPUMS) and 1900 Vital Statistics following the methodology in Brown and Lin’s “The Gray Divorce Revolution: Rising Divorce Among Middle-Aged and Older Adults, 1990-2010.” Divorcing later in life tends to come with financial downsides, as gray divorcees typically have less financial security than married and widowed adults. This is particularly true among women. To handle financial instability later in life, many retirees are using reverse mortgages as a way to pay one of the spouses involved in the separation when the assets are divided.

They could also use a reverse mortgage as a purchase transaction and put down the minimum required down payment, keeping the rest of the proceeds as cash, and they won’t have a required monthly principal and interest mortgage payment.

 

Today’s reverse mortgage is versatile, and this is just a partial list of the financial planning implications. Many people use reverse mortgage funds to renovate to create their dream home, or right-size their living situation and move to a home that fits their ideal retirement. Just like your 40iK, IRA, and annuities, your home equity can significantly enhance your retirement strategy. Contact a representative to see if a reverse makes sense for your situation.

 

DISCLOSURES:

Oregon Only:·When the loan is due and payable, some or all of the equity in the property that is the subject of the reverse mortgage no longer belongs to borrowers, who may need to sell the home or otherwise repay the loan with interest from other proceeds. FAR may charge an origination fee, mortgage insurance premium, closing costs and servicing fees (added to the balance of the loan).·The balance of the loan grows over time and FAR charges interest on the balance.· Borrowers are responsible for paying property taxes, homeowner’s insurance, maintenance, and related taxes (which may be substantial). We do not establish an escrow account for disbursements of these payments. A set-aside account can be set up to pay taxes and insurance and may be required in some cases. Borrowers must occupy home as their primary residence and pay for ongoing maintenance; otherwise the loan becomes due and payable. The loan also becomes due and payable (and the property may be subject to a tax lien, other encumbrance, or foreclosure) when the last borrower, or eligible non-borrowing surviving spouse, dies, sells the home, permanently moves out, defaults on taxes, insurance payments, or maintenance, or does not otherwise comply with the loan terms. Interest is not tax-deductible until the loan is partially or fully repaid.

 

©2020 Finance of America Reverse LLC is licensed in 50 states and D.C. | Equal Housing Opportunity | NMLS ID # 2285 | www.nmls.consumeraccess.org | 8023 East 63rd Place, Suite 700 | Tulsa, OK 74133 Not all products and options are available in all states | Terms subject to change without notice | AZ Mortgage Banker License #0921300 | Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act | Georgia Residential Mortgage Licensee | Illinois Residential Mortgage Licensee | Kansas Licensed Mortgage Company | MA Lender/Broker #MC2855 | Licensed by the Mississippi Department of Banking and Consumer Finance | Licensed by the New Hampshire Banking Department | Licensed by the N.J. Department of Banking and Insurance | Licensed Mortgage Banker — NYS Banking Department where Finance of America Reverse is known as FAReverse LLC in lieu of true name Finance of America Reverse LLC | Rhode Island Licensed Lender | HUD HECMS REQUIRE PAYMENT OF INITIAL AND PERIODIC MORTGAGE INSURANCE PREMIUM.