{"id":10501,"date":"2020-08-31T12:17:42","date_gmt":"2020-08-31T19:17:42","guid":{"rendered":"http:\/\/lesliedinaberg.com\/wordpress\/?p=10501"},"modified":"2020-08-31T12:17:42","modified_gmt":"2020-08-31T19:17:42","slug":"reverse-mortgages-101","status":"publish","type":"post","link":"https:\/\/lesliedinaberg.com\/wordpress\/?p=10501","title":{"rendered":"Reverse Mortgages 101"},"content":{"rendered":"
\"Reverse<\/a>

Reverse Mortgages 101, from Santa Barbara Independent, Active Aging Special Section, July 30, 2020.<\/p><\/div>\n

MUTUAL OF OMAHA\u2019S\u00a0MONTECITO OFFICE OFFERS\u00a0PLANNING ADVICE<\/strong><\/p>\n

A type of loan available to homeowners aged\u00a062 and older, reverse mortgages allow people\u00a0to borrow money based on the value of their\u00a0homes. Unlike other loans, the debt isn\u2019t immediately\u00a0due. Instead, payment is deferred until the borrower\u00a0either dies or sells the home, at which point the debt\u00a0comes out of their estate or sale.<\/p>\n

\u201cIn the right circumstances, a reverse mortgage\u00a0can be a really nice thing for older homeowners in\u00a0retirement,\u201d said Tom Kronen<\/a>, an advisor at Mutual\u00a0of Omaha\u2019s Montecito office<\/a> who has specialized in\u00a0this type of loan for almost 20 years. He often works\u00a0with multiple family members and also prefers to\u00a0get a trusted advisor involved, whether an attorney,\u00a0accountant, or financial advisor.<\/p>\n

\u201cThis is much more\u00a0of a relationship business than the traditional one\u00a0between a broker and client,\u201d said Kronen.\u00a0A reverse mortgage should not be seen as\u00a0a silver bullet for financial survival, and Kronen\u00a0does not suggest using it as a \u201cstand-alone\u00a0product.\u201d He explained, \u201cSo you are utilizing\u00a0home equity, but it\u2019s better if you utilize home\u00a0equity in coordination with retirement income\u00a0and other assets.\u201d<\/p>\n

But it can be a worthy tool during tough\u00a0times. \u201cWhen financial markets are really\u00a0volatile, and especially if you sustain losses\u00a0in the market, that\u2019s not a good time to pull money\u00a0out of your savings and investment accounts,\u201d said\u00a0Kronen. \u201cInstead, you can use a reverse mortgage to\u00a0supplement your income and carry you over until\u00a0the markets rebound.\u201d<\/p>\n

Many are concerned that this arrangement will\u00a0interfere with their ability to leave money to their\u00a0family when they\u2019re gone, and there\u2019s truth to that.<\/p>\n

\u201cLegacy is a really important thing, and it\u2019s something\u00a0that we always bring up in the conversation\u00a0because it can really affect decision making,\u201d\u00a0said Kronen. \u201cBut a reverse\u00a0mortgage sometimes can be even better\u00a0for legacy; it just depends on the\u00a0situation. One thing we like to say in\u00a0our business is: A reverse mortgage is\u00a0best when it\u2019s not used as a last resort.\u00a0It\u2019s better if it\u2019s used earlier in retirement and as part\u00a0of a coordinated plan.\u201d<\/p>\n

You can actually use a reverse mortgage<\/a> to finance\u00a0the purchase of a new home. \u201cIf a retired couple or\u00a0individual is downsizing or rightsizing into a new\u00a0home from their old home, they can use a reverse\u00a0mortgage exactly like they would get a mortgage in a\u00a0new home,\u201d he said. \u201cBut you are not obligated to have\u00a0mortgage payments on that new house. You\u2019re going\u00a0to get to put more money in the bank.\u201d<\/p>\n

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Originally published in the Santa Barbara Independent on July 30, 2020. To view the Active Aging Guide to Senior Life, Seen Through a Pandemic Lens, click here<\/a>.<\/p>\n

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