January 18, 2018 | Journal of Financial Planning

Integrating Home Equity and Retirement Savings through the “Rule of 30”

By: Peter Neuwirth, Barry H. Sacks, Stephen R. Sacks

This paper examines the effect of using reverse mortgage credit lines to supplement retirement income by two types of retirees that have not been addressed in the previous literature: (1) those whose retirement savings are significantly below those of the mass affluent; and (2) those who are “house rich/cash poor.”

January 3, 2018 | Tools for Retirement Planning

Major Changes in Tax Deductions for Reverse Mortgages: December 2017 Update

By: Tom Davison

Important income tax changes in December 2017 affect reverse mortgages. The Tax Cuts and Jobs Act (TCJA) of 2017 eliminated deductions for home equity interest starting in 2018. Deductions are still allowed for acquisition debt interest.

October 2, 2017 | Tools for Retirement Planning

Integrating Home Equity and Retirement Savings through the “Rule of 30” by Neuwirth, Sacks and Sacks

By: Tom Davison

New reverse mortgage research demonstrates that home equity or investment portfolios may be equally effective when funding sustainable spending. The study by Peter Neuwirth, Barry Sacks, and Stephen Sacks in the October 2017 Journal of Financial Planning provides insights using home and portfolio sizes from $100,000 to $800,000.

September 25, 2017 | Tools for Retirement Planning

CFPB Report on Social Security Claiming and Reverse Mortgages: Slanted by Silence

By: Tom Davison

The CFPB released a report on August 24 titled “Issue Brief: The costs and risks of using a reverse mortgage to delay collecting Social Security”. On a quick glance, the 26-page report seemed well written and documented (58 footnotes!). The analysis itself also appears to be carefully done. However, a considered reading finds the report suffers from silent and critical omissions across a variety of important factors. 

September 24, 2017 | Tools for Retirement Planning

Reverse Mortgages Rules To Change Positively And Negatively For Retirees – from Forbes.com, by Jamie Hopkins

By: Tom Davison

A number of recent articles stated that the government’s new reverse mortgage changes (Mortgagee Letter 2017-12) will make the program less attractive to borrowers. However, this might have been an initial overreaction. While the program is being adjusted, the changes to the program could improve the market, lower costs for some borrowers, and secure the long-term health of the program.

July 10, 2017 | Tools for Retirement Planning

Do you Prefer a ReLOC or HELOC?

By: Tom Davison

Is there a better alternative for homeowners over age 62?  A ReLOC may be a far better choice for many retirees. ReLOC is a nickname that stands for either Retirees Line of Credit or Reverse Mortgage Line of Credit. While ReLOCs share many features with HELOCs, three unique features make a ReLOC a line of credit designed for retirees.

June 18, 2017 | Tools for Retirement Planning

Reverse Mortgages: Many Users, Many Uses

By: Tom Davison

Reverse mortgages provide access to cash. Cash is the most flexible financial resource of all. In turn, access to cash makes a reverse mortgage a very flexible resource. Many homeowners could qualify for an FHA Home Equity Conversion Mortgage (HECM).

May 6, 2017 | Tools for Retirement Planning

Understanding Reverse Mortgages: An Interview with Shelley Giordano

By: Tom Davison

SOA research has shown that non-financial assets are the biggest part of retirement assets for many middle American families. The largest part of non-financial assets by far are home values. Housing is the largest item of spending for older Americans, and housing costs vary greatly by geographic area and type of housing.

April 26, 2017 | Tools for Retirement Planning

Can Reverse Mortgages Hedge the Most Common Retirement Income Risks?

By: Tom Davison

This is the title of an article written by Don Graves, RICP®, and published by the Society of Financial Services Professionals in January 2017. Don points out retirees have four key concerns called the 4Ls: Longevity, Lifestyle, Liquidity, and Legacy.

April 18, 2017 | Tools for Retirement Planning

Tax Deductions and Reverse Mortgages: April 2017 Update

By: Tom Davison

April 2017 update: Michael Kitces published “The Taxation of Reverse Mortgage Loan Proceeds and Interest Payments” on his Nerd’s Eye View blog on April 12, 2017. It has additional information on tax deductions. I recommend it to you.