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The reverse mortgage has won some new respect.

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A decade ago, most financial advisers would roll their eyes at the mention of reverse mortgages, loans that give homeowners an advance on their home equity and allow them to delay repayment until the home is sold. Such products, these advisers used to say, weren’t for their clients, but rather for those who didn’t prepare financially for retirement.

New safeguards in recent years, however, have led many advisers and researchers to change their minds about reverse mortgages. Indeed, many now are exploring when and how to use them in financial plans. One important change, the Reverse Mortgage Stabilization Act of 2013, prevents homeowners in most cases from taking all their equity at once—roughly 40% of the total amount that can be borrowed is unavailable until a year after the initial loan. Other recently enacted regulations require homeowners to demonstrate they are able and willing to pay their property taxes and home insurance. And there are new protections for the non-borrowing spouse.

Recent policy changes “should make the product safer for seniors in the future,” says Stephanie Moulton, an associate professor at Ohio State University and co-author of a 2015 paper on reverse mortgages published in the Journal of Urban Economics. Prof. Moulton estimates that such changes as limiting how much equity borrowers can extract upfront could cut the default rate on reverse mortgages in half. (In 2014, nearly 12% of reverse-mortgage borrowers in the federally insured Home Equity Conversion Mortgage program were in default on their property taxes or homeowners insurance.)

“Over time, these changes may encourage larger banks to re-enter the market, further increasing the credibility of the product and potentially lowering costs,” Prof. Moulton says.

Of course, there are still risks, including spending the proceeds too quickly and suffering losses if the proceeds are invested, as pointed out in a 2015 paper written by Wade Pfau, a professor at the American College of Financial Services in Bryn Mawr, Pa., that favored the use of reverse mortgages in a retirement-income plan under the right circumstances.

While acknowledging the risks, Prof. Moulton says that “one of the advantages of the federally insured reverse mortgage, the HECM, is that the government assumes some of the risk for the borrower.” For example, she notes that HECM borrowers can never end up on the hook for negative equity. If the balance on the reverse mortgage ever grows to exceed the value of the home, the federal insurance covers the difference.

Here’s a look at some of the reverse-mortgage strategies financial planners suggest:

Foreclosure & Bank Owned homes in Chula Vista, CA

Taking a lump sum

Borrowing enough of the equity in a house in a lump sum to pay off an existing mortgage is one of the most frequent uses of a reverse mortgage, says Prof. Moulton. More than 60% of reverse-mortgage borrowers have used the proceeds for this purpose, according to her research. “This actually may be a pretty smart strategy,” she says.

Prof. Moulton cites a recent report by Harvard University’s Joint Center for Housing Studies that found that nearly 40% of seniors age 65 and older carry a mortgage today, a rate that has more than doubled since 1992. “Using a reverse mortgage to pay off a forward mortgage frees up monthly cash flow to a household,” she says. “Essentially it has the same effect on a household budget as receiving a monthly annuity payment.” But lump-sum borrowing can go wrong. Harold Evensky, chairman of Evensky & Katz/Foldes Financial, a wealth-management firm based in Lubbock, Texas, generally advises against using a lump sum as leverage to increase debt—as a down payment on a second home or vacation home, for instance. “There may be circumstances that justify the strategy, but it’s not something that should be considered without carefully considering the potential risk,” he says. “The risk is overleveraging,” he says—taking on more debt than you can afford to pay off.

And even if that isn’t the case—if the homeowner spends the borrowed money without incurring additional debt, say on a vacation or a car—spending the equity in a home this way deprives the homeowner of a valuable financial cushion, he says.

Foreclosure & Bank Owned homes in San Diego, CA

Opening a line of credit

Increasingly, advisers are suggesting that homeowners establish a line of credit through the HECM program whether they need the money immediately or not, because it can be used in several ways, as the need arises, to protect savings or even increase income in retirement.

A line of credit makes more sense than borrowing a lump sum and keeping it in reserve, says John Salter, an associate professor at Texas Tech University who has co-written papers with Mr. Evensky on reverse mortgages. That’s because, due to the intricacies of reverse-mortgage terms, the unused portion of a line of credit grows over the years, giving the homeowner access to more cash.

Shelley Giordano, chairwoman of the Funding Longevity Task Force, a Washington, D.C.-based industry group that promotes the use of home equity as a tool for retirement income, suggests setting up a reverse-mortgage line of credit as a way of protecting retirement funds from fluctuations in the financial markets.

Here’s the idea: In a bear market, homeowners can borrow funds as needed through the line of credit rather than withdrawing money from their investment portfolios. Withdrawals from a portfolio in down markets lock in losses and leave less money to grow when markets rebound. By borrowing instead, homeowners give the portfolio a better chance to recoup its losses when markets turn around.

Once the portfolio recovers, it can be used to pay off the line of credit, which is then fully available the next time cash is needed in a bear market. Ms. Giordano notes an HECM line of credit “cannot be canceled, frozen or reduced regardless of what the home value does in the future.”

An HECM line of credit also can be used as a source of income for those who want to delay applying for Social Security benefits and so increase their monthly payout when they do start taking benefits, Ms. Giordano says. After you apply for Social Security, you can stop taking money from the line of credit and, if you want, pay the loan back.

Because income from a reverse mortgage isn’t taxed, experts say an HECM line of credit can also be used—in place of taxable withdrawals from retirement accounts—to avoid tax-bracket creep, as well as the higher Medicare Part B and Part D premiums that can result from higher incomes. Ms. Giordano also suggests using a reverse-mortgage line of credit to pay taxes due on Roth IRA conversions. In the conversion process, distributions from IRAs are taxed as ordinary income, and experts often recommend paying those taxes with funds outside the IRA, because using money from the IRA for that purpose generates even more taxes.

Mr. Evensky says the usefulness of reverse mortgages belies the negative impression some people still have of them.

“I believe most criticisms relate to a myopic view of the product that has not been reviewed for decades,” he says. “Unquestionably there can be misuses of the product. But the problem is the use, not the product.”

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Article provided by Wall Street Journal

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Video: Yes, I’m the voice behind the …

kwvideoFinding the perfect home has never been easier with my “FREE” KW mobile app … you’ll get the most accurate and up-to-date real estate information that you won’t find on some other apps. Simply target an area by drawing a circle or dropping a pinpoint.

Search for property types with ease and see inside your dream home with full screen photos and property details. The app allows you to connect with me so I can provide you with great service in a shorter amount of time. You can also estimate your home loans with the mortgage calculator.

Just visit the Google play store or Apple app store to download the free app today. Or, simply text KW2NXCXMK to 87778 for the download link.

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Need your Social Media “Shares” :-)

Please share with all your friends. Congresswoman Susan Davis is looking for a VETERAN for her San Diego Office. This will be through the Wounded Warrior Program and is a great opportunity for any VETERAN with a disability rating of 30% or greater.

We really appreciate your support and a simply “Share” on your behalf.

 

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Wounded Warrior Job Opening Website | Forward to a Friend | Share on:  

POSITION AVAILABLE:
VETERANS COMMUNITY REPRESENTATIVE

Dear Friend,

I am honored to have been awarded the opportunity to hire a Veterans Community Representative in my San Diego office under the Wounded Warrior Program. I would appreciate it if you would help me spread the word and encourage eligible individuals you know to apply. This program is limited to veterans who have served on active duty since September 11, 2001, with less than 20 years of service and have a minimum 30% disability rating from the Department of Veterans Affairs.

Click here for the job announcement, including detailed directions on how to apply through the Wounded Warrior Program. Thank you for your help!
Warm regards,

Susan A. Davis
Member of Congress
Website | Contact
U.S. House of Representatives
1214 Longworth House Office Building
Washington, DC 20515
Phone: (202) 225-2040
Fax: (202) 225-2948

2700 Adams Ave
Suite 102
San Diego, CA 92116
Phone: (619) 280-5353
Fax: (619) 280-5311

J.R.’s top picks for the Aviara community in Carlsbad, CA 92011

Homes Near Aviara Oaks Elementary School in Carlsbad

 

By: J.R. Thrasher of San Diego Real Estate Veterans Lic# 01888955

 

Find homes for sale near Aviara Oaks Elementary School in Carlsbad. Our For Sale property information is a direct feed from the San Diego MLS and is updated multiple times per day.

 

The homes near Aviara Oaks Elementary School in Carlsbad have easy access to schools, shopping, trails and parks. You will love coming home to the Homes near Aviara Oaks Elementary School in Carlsbad every day!

 

To find out what your home near Aviara Oaks Elementary School in Carlsbad is worth, fill out this simple form.

 

Awesome Schools

To get local school scores and more information about the Elementary and Middle schools serving the Carlsbad area, check out Carlsbad School Reports on my website.

Super Convenient Carlsbad Location

 

Insert image from http://www.sandiegorealestateveterans.com/mischool/zip/92011/

Aviara Oaks Elementary School in Carlsbad.

 

This location offers convenient access to several parks, trails, grocery stores and shopping malls.

.5 miles to the Shopping Center.

5 miles to Marine Corps Air Station Miramar.

1 mile to Sharp Rees Steely Hospital.

2.4 miles to Carlsbad High School.

13 miles to Downtown San Diego.

15 miles to San Diego International Airport.

 

Find out about everything that is nearby to Aviara Oaks Elementary School in Carlsbad including places of worship.

The homes near Aviara Oaks Elementary School in Carlsbad are a great place to call home. You will not be disappointed if you end up living here. You can find homes for sale near Aviara Oaks Elementary School in Carlsbad (if there are any available today) as well as all available Carlsbad homes for sale on my website.

 

Affordable Low and No Down Payment Options

Homes near Aviara Oaks Elementary School in Carlsbad are approved for several types of financing with low or no down payment required.  Find out what programs you qualify for.  VA Zero Down Financing approved, FHA financing approved, Conventional Financing approved.  Learn more about How To Buy A House With A Low Down Payment In Carlsbad.

 

Free Market Report For The Homes Near Aviara Oaks Elementary School in Carlsbad

The data used this Free Market Report is consolidated from multiple sources and includes current listings, recent sales, and more. Whether you’re a buyer or seller, the knowledge you gain will help put you in control of your real estate transactions.

Call or email anytime to discuss how this information can benefit you!

 

Thank you for reading about the Homes Near Aviara Oaks Elementary School in Carlsbad!

 

Provided courtesy of the San Diego Real Estate Veterans
Keller Williams SD Central
Hire a positive and proactive Team of Realtors to help you find your next home!
Call or text 619-929-0105 for information on Buyer’s Representation Services
(NO COST TO HOME BUYERS)
Search entire San Diego MLS for FREE at www.SanDiegoRealEstateVeterans.com
Get a FREE report on YOUR HOME’s Value at www.MetroHomeValue.com
Like us on Facebook https://www.facebook.com/Sandiegorealestateveterans

 

GET THE HOME SEARCH PHONE APP CLICK HERE

OR

You can Text KW2NXCXMK to 87778 
Enter the same code when prompted once you install the app on your mobile device.

Sell Your San Diego Home No Obligation Market Report

 

Search for your Home in San Diego County

 

Enter your ZIP CODE for a  Market Report 

 

“SAN DIEGO Real Estate VETERANS” at www.SanDiegoRealEstateVeterans.com

 

 

JR’s Top Pick for Homes Seen This Week in Bay Ho 92117

This home has a great view and it made my list this week because of the HUGE price reduction. The seller said I want it sold NOW! Spectacular top to bottom remodel including gorgeous kitchen with high end appliances, luxurious bathrooms, new windows, fresh paint inside & out, flooring, landscape…too many ‘new’ items to list.  Great open & spacious floorplan with tons of natural light! Home boasts wonderful sit down bay, ocean & Seaworld fireworks views!  Huge 27,433 square foot lot with amazing outdoor entertaining area!  More than turn key, this home is contemporary masterpiece! BONUS:  $1500 CREDIT FOR REFRIGERATOR!

Click HERE for 25 pictures of my favorite home in Bay Ho this week.

 

Homes For Sale Near Aviara Oaks Middle School

By: J.R. Thrasher of San Diego Real Estate Veterans Lic# 01888955

Find homes for sale near Aviara Oaks Middle School in Carlsbad. Our For Sale property information is a direct feed from the San Diego MLS and is updated multiple times per day.

The homes near Aviara Oaks Middle School in Carlsbad have easy access to schools, shopping, trails and parks. You will love coming home to the Homes near Aviara Oaks Middle School in Carlsbad every day!

To find out what your home near Aviara Oaks Middle School in Carlsbad is worth, fill out this simple form.

Awesome Schools

To get local school scores and more information about the Middle and Middle schools serving the Carlsbad area, check out Carlsbad School Reports on my website.

Super Convenient Carlsbad Location

Information for Aviara Oaks Elemantary
Aviara Oaks Middle School
Aviara Oaks Middle School

Aviara Oaks Middle School in Carlsbad.

This location offers convenient access to several parks, trails, grocery stores and shopping malls.

.5 miles to the Shopping Center

1-2 miles to the coast

2.4 miles to Carlsbad High School

13 miles to Downtown San Diego

15 miles to San Diego International Airport

Find out about everything that is nearby to Aviara Oaks Middle School in Carlsbad including places of worship.

The homes near Aviara Oaks Middle School in Carlsbad are a great place to call home. You will not be disappointed if you end up living here. You can find homes for sale near Aviara Oaks Middle School in Carlsbad (if there are any available today) as well as all available Carlsbad homes for sale on my website.

Affordable Low and No Down Payment Options

Homes near Aviara Oaks Middle School in Carlsbad are approved for several types of financing with low or no down payment required.  Find out what programs you qualify for.  VA Zero Down Financing approved, FHA financing approved, Conventional Financing approved.  Learn more about How To Buy A House With A Low Down Payment In Carlsbad.

Free Market Report For The Homes Near Aviara Oaks Middle School in Carlsbad

The data used this Free Market Report is consolidated from multiple sources and includes current listings, recent sales, and more. Whether you’re a buyer or seller, the knowledge you gain will help put you in control of your real estate transactions.

Call or email anytime to discuss how this information can benefit you!

Thank you for reading about the Homes Near Aviara Oaks Middle School in Carlsbad!

 

Provided courtesy of the San Diego Real Estate Veterans
Keller Williams SD Central
Hire a positive and proactive Team of Realtors to help you find your next home!
Call or text 619-929-0105 for information on Buyer’s Representation Services
(NO COST TO HOME BUYERS)
Search entire San Diego MLS for FREE at www.SanDiegoRealEstateVeterans.com
Get a FREE report on YOUR HOME’s Value at www.MetroHomeValue.com
Like us on Facebook https://www.facebook.com/Sandiegorealestateveterans

GET THE HOME SEARCH PHONE APP CLICK HERE

OR

You can Text KW2NXCXMK to 87778 
Enter the same code when prompted once you install the app on your mobile device.

Sell Your San Diego Home No Obligation Market Report

Search for your Home in San Diego County

Enter your ZIP CODE for a  Market Report 

“SAN DIEGO Real Estate VETERANS” at www.SanDiegoRealEstateVeterans.com

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