Reverse mortgages have been getting nods from media in the past months as recent laws protecting homeowners and reducing chance of foreclosure or eviction have been passed, Huffington Post reports.
When implemented, the new reverse mortgage laws could also make home loans more viable as an investment protection strategy. A great number of older Americans are in favor of the reverse mortgage for investment protection as it allows them to take out a one-time lump sum payment, receive ongoing monthly payments or have access to a line of credit.
This theme was highlighted in a recent column on personal finance on USA Today. Retirement contributor Robert Powell was asked by a reader on whether or not a reverse mortgage is a better option than converting their IRA and Roth IRA.
Among the factors considered was the taxes that the couple would end up paying. The couple could also consider a reverse mortgage for investment protection, Powell suggested, for the convenient line of credit it offers.
"As for the reverse mortgage, some experts suggest applying for a reverse mortgage with a line of credit as soon as possible," Powell wrote. "Why might you do this? Having a reverse mortgage with line of credit in place gives you the option of taking money out of your house instead of your IRAs when markets are down."
Powel cited some facts from Wade Pfau of The American College of Financial Services, outlining six different ways to factor in a home equity to retirement income strategy by making use of the benefits of a reverse mortgage.
He then added a study by Wade Pfau of The American College of Financial Services detailing six strategies on how to incorporate home equity into a retirement income plan by utilizing a reverse mortgage.
It is important that retirees seek advice from an experienced financial advisor prior to making any sort of large move like going for a reverse mortgage, Powell emphasized.
As conclusion: "What Pfau's study did conclude without equivocation was this: 'A key theme is that there is great value for (people) to open a reverse mortgage line of credit at the earliest possible age,'" Powell wrote.
