CPA and financial investigator, Joshua Wiesenfeld recently wrote an article for the AICPA that encourages his fellow CPAs to look at reverse mortgages as part of a larger strategy. “Your client’s home may very well be his or her greatest asset. Educate clients about the various ways to leverage this asset to help them maximize their income. For certain sensible and judicious borrowers, a reverse mortgage may be a tool to help them spend their golden years with dignity and financial security”.

Reverse mortgages, which reportedly have been in use since Deering Savings & Loan issued one to Nellie Young of Portland, Maine, in 1961, have long been viewed with suspicion. Evoking images of late-night infomercials and disreputable loan agencies, the reverse mortgage is the product of last resort for many CPA financial planners.

But while detractors characterize reverse mortgages as a quick fix that decreases borrowers’ net worth and the value of their estate, traps them in their homes for the rest of their lives, and subjects them to high upfront costs, this view may be outdated.

A reverse mortgage is a loan against a home-equity line that can be issued as a lump sum, fixed installments, or a line of credit. Unlike the traditional forward mortgage, a reverse mortgage does not necessitate loan payments by the borrower. To qualify for a reverse mortgage, borrowers must be 62 years old or older, which makes this banking product attractive to older Americans who wish to supplement their retirement income. The loan balance becomes due when the borrower dies, moves away, or sells the home, and reverse mortgages are structured so that the loan amount does not exceed the property’s value.

The following conditions can indicate that a reverse mortgage might just be the right product for your client:

* Your client plans to stay put

* Your client can afford the upfront costs

* Your client can coordinate with other investments

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