By George A. Downey

Home equity, older homeowners’ largest asset, is not liquid and seldomly a consideration in planning practices. However, reverse mortgages change that and obligate financial advisors to know the potential and advise clients accordingly.
Reverse mortgages are financial products that enable older homeowners to convert a portion of home equity into cash and/or credit without having to sell their home or make mandatory monthly mortgage payments, among other benefits. In financial planning, the ability to increase resources with additional cash from home equity can improve and extend planning objectives.
Why it matters
In today’s evolving retirement landscape, financial advisors face growing pressure to deliver strategies that ensure long-term security for aging clients. Yet, one of the most underutilized and misunderstood assets – home equity – remains largely absent from traditional planning conversations. This oversight is no longer acceptable.
Reverse mortgages are not suitable for all older homeowners. However, when appropriate, they can increase financial security and reduce the fear of running out of money in retirement. Unfortunately, too few financial advisors have received reverse mortgage training or understand their potential. This failing conflicts with their fiduciary obligations to be adequately informed when advising clients what to do, or refrain from doing, in their planning.
As reverse mortgages emerge as a powerful tool to unlock liquidity from homeownership, advisors have a fiduciary duty to understand and explain how these products can enhance retirement outcomes. Informed guidance on reverse mortgages is not just beneficial, it’s essential.
Other considerations for reverse mortgages: Eligibility requirements apply. HECM counseling is required. Subject to credit and income approval. You must occupy the residence as your primary home. You must continue to pay for property taxes, insurance payments, homeowners’ association fee, home maintenance costs, and other fees as required. You must have significant cash available for the down payment. The balance of the loan grows over time and interest is charged on the balance. The loan becomes payable when the last borrower on eligible non-borrowing spouse passes away, sells the home, permanently moves out, defaults on taxes, insurance, or maintenance, or otherwise does not comply with the loan terms. 
About the Author: George Downey, CRMP (NMLS ID 10239) is the Regional Senior Vice President of The Federal Savings Bank branch located at 100 Grandview Road, Suite 105, Braintree, MA 02184. Contact Mr. Downey at 781-843-5553 / Cell 617-594-3666 / gdowney@thefederalsavingsbank.com, www.thefederalsavingsbank.com/georgedowney