{3:48 minutes to read} Today we are speaking with Mr. Warren Goldberg, from Mortgage Wealth Advisors in Plainview, New York. Continuing the theme from last month, we’re going to be talking about retirement and distribution planning.

Throughout people’s lives, financial planning has always focused on how to accumulate money. As we have said before: when climbing the mountain, the goal is to get to the top, but even more important is the descent back down the mountain.

Michael Fliegelman:

Today I was reading some articles about how life expectancies are getting longer and longer, so we need to have not only a sufficient amount of money at retirement but we need to be able to have that money possibly last throughout 1, or if the individual is married, 2 very long lives. Joint life expectancies getting longer and longer caused me to think that it would be good to provide some expert information about reverse mortgages, a very misunderstood product.

If you could, Warren, share with the readers some of the major misconceptions about what I think could be a very helpful retirement tool.

Warren Goldberg:

There are a lot of misconceptions about reverse mortgages and unfortunately, the main source of information for people are commercials. They are hearing and taking advice from Robert Wagner or Fred Thompson or Henry Winkler. When the consumer calls the phone number listed at the end of the commercial, they wind up speaking to some sales person who can tell them a little bit about the loan, but may not necessarily be looking out for their best interests.

A great many seniors frown upon the reverse mortgage, thinking that there is some catch to it that will allow the lender to take their house, or they are no longer going to own the house. That is simply not the case.

A reverse mortgage is just like a “forward” or traditional mortgage in the sense that the bank puts a lien on the property. The current homeowner never loses the property unless the property is foreclosed upon or if they sell the house.

The other big misconception is how the reverse mortgage works. They hear that reverse mortgages are very expensive and are a negatively amortized loan; reverse mortgages typically DO negatively amortize. But most misconceptions revolve around the prospect of the consumer losing their home, which is very rare.

Many people may qualify for a reverse mortgage, and I would often recommend this great tool to help them accomplish their cash flow or estate planning needs. But there are just as many seniors for whom I would not recommend a reverse mortgage. To those people, I would point out that while there are a lot of memories in the house, financially speaking they probably would be better off selling the house, downsizing and living off the proceeds of that sale. For those that don’t fit that type of a mold, then reverse mortgage becomes a good option.

There are rules surrounding reverse mortgages, such as who can get it, age minimums, and how borrowers can benefit. In Part 2 of our interview, we will take a look into those rules.

Michael Fliegelman, CLU, ChFC, AEP, RFC
Founder / President, Strategic Wealth Advisors Network
(631) 262-9254
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Brokerage Director, MassMutual


Please note that the information being provided is strictly as a courtesy. Always confer with your CPA prior to attempting to take any tax deduction. Michael Fliegelman is not a CPA, nor should the contained be considered tax “advice”.

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