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The Mortgage Professor Outlines Reasons for Eligible Homeowners to Act Sooner Than Later
One well recognized mortgage expert, The Mortgage Professor: Jack Guttentag. He advocates taking a reverse mortgage now rather than waiting. In his article “To Avoid Outliving your Money, Take a HECM Reverse Mortgage Before Interest Rates Rise”, the professor points out that the shortfall in retirement is not improving for most therefore eligible homeowners should consider acting today.
In his article Mr. Guttentag points out many financial planners working with clients with enough assets to place under management are often at risk. “A favorite planning tactic is to calculate and annual asset liquidation plan that is consisten with a target probability of running out 3 to 4% are the numbers I’ve seen. In other words he states that many retirement plans put in place by financial planning professionals assume this risk. Guttentag says such a risk is unacceptable to most seniors. Put simply he recommends using the HECM as an insurance policy against outliving one’s money utilizing an open yet untapped HECM line of credit.
Why does the professor recommend to act now rather than later? Simply put interest rates. This chart from his article illustrates the true cost of waiting to get a reverse mortgage until rates have increased. He then shows the advantage of securing the HECM in a low interest rate environment and the subsequent growth in the principal limit to which the line of credit is tied as…
Download a transcript of this episode here.
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