Top 5 Most Frequently Asked Questions

(1) Is My Client a Candidate for the Reverse Mortgage?

The reverse mortgage is a federally-insured loan that allows homeowners age 62 and older to turn a portion of their home’s value into tax-free money without making monthly payments or giving up ownership of the home. As a rule of thumb, clients should have about 50-60% equity in their home, though, this is not mandatory.

(2) How Does the Line of Credit Grow?

One of the most powerful features of the HECM reverse mortgage is that the unused portion of the line of credit has a built-in, guaranteed growth factor. The program was specifically designed in 1988 such that once the line of credit is established, it will continue to grow regardless of the home’s value. To review the growth formula, see the resources below.

(3) What If the Reverse Mortgage Doesn’t Eliminate My Clients’ Mortgage?

Sometimes the proceeds from a reverse mortgage are not enough to pay off the existing mortgage obligations (which is a requirement). This is a common occurrence, and there are four options for your clients to consider: (1) pull the additional dollars needed from savings, (2) hope for better appraisal value, (3) wait and continue paying down the current mortgage and (4) consider moving.

(4) How Does Loan Repayment Work? 

The reverse mortgage is repaid when the last surviving borrower permanently departs the home–either moves or deceases. At that time, whatever money was borrowed, plus the interest that has accrued is repaid, and 100% of the remaining equity is passed on to the borrowers, their heirs or their estate.

(5) How Are Advisors Compensated? 

The reverse mortgage fits seamlessly into the four general ways advisors are compensated: the money they manage, the products they sell, the clients they keep and the people their clients tell. I have found that advisors who focus on their craft but have a network of specialists to call as needed tend to not only be the most successful in serving their clients, but also generate the most revenue.

For a closer look at the reverse mortgage including the 42 strategies that can be incorporated with retirement income planning, get your copy of my books. I’ve written one for advisors and the other for clients of advisors.



Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®
Don Graves, RICP® is a Retirement Income Certified Professional and one of the Nation’s Leading Educators on the Emerging Role of Reverse Mortgages in Retirement Income Planning. He is president and founder of the HECM Institute for Housing Wealth Studies and an adjunct professor of Retirement Income at The American College of Financial Services. He has helped tens of thousands of Advisors as well as more than 3,000 personal clients since the year 2000
Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®
Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®

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