This website and others have been offering their opinion on the use of reverse mortgages to take the pressure off the portfolio for some time now. The Wall Street Journal recently recognized the same in an article from Anne Tergesen entitled Reverse Mortgage: Get Cash Use Caution.

What is important to understand is in hind sight, there are tons of folks that could have protected their investments valued more significantly than their real estate holdings by use of a reverse mortgage. If you were drawing from a $1,000,000 portfolio that fell 30% or more and you were in a $500,000 home, you now have a $700,000 portfolio in a $400,000 home. If that portfolio was providing the much needed cash to pay day to day living expenses, then the bucket that already has a hole in it also has someone taking money out of the top. Its going to take a while to plug that hole back up and refill the bucket. The cash flow capabilities from the reverse mortgage can supplement the cash flow needs which stops additional loss of the bucket's holdings. The reverse mortgage won't replace the cash on its own but it will stem the flow.

A recent conversation with a client that thought she had sufficient holdings revealed a wonderful analogy about how a person's home can provide the power to fuel a senior's life. After grasping the concept of using a home's equity to provide cash for living expenses, she equated it to "living over a vast oil field with no oil derrick to access the oil".

Our clients "get it" when they aren't being sold to but being educated on how the reverse mortgage works. Release the oil with a derrick, release the pressure on the portfolio with a reverse mortgage.

Rick Mcinturff- NMLS# 461948

240-506-4611