How to possibly derive better growth than an annuity without a new investment.

I hope to be able to illustrate a picture for you here about a new take on the use of a reverse mortgage as a retirement planning vehicle. 

Technically speaking- if you have an asset that you've already acquired, paid for and sitting on for some time- you wouldn't necessarily think of it as a new investment.  At the same time, if that asset had liquidity potential but allowed you to continue to hold onto it- like, hug it and paint it and bake a cake in it, prune and mow it, shovel snow off it, celebrate in it (get the picture) and yet you could generate liquidity out of it, you still probably wouldn't call it a new investment.  Your home could be that type of investment if you've considered the purchase of an annuity that you deliberated over and over in your head but couldn't justify depleting a pile of cash that may or may not have tax consequences and may or may not ever be used (like if you're 65 but don't plan to use it until 75).  I'm not an annuity sales rep or a financial planner but I am certified to teach/provide continuing education credits for CFPs, CPAs and Realtors as a reverse mortgage expert.  Therefore I don't know all the intricacies of an annuity but essentially if you hope to (meaning, want to) generate a certain amount of monthly income later into your retirement and invest a certain amount of money into the product (called a premium) then you can make a new investment in an annuity.


Many annuity contracts are sold with guarantees that provide some principal protection or base-level return. These guarantees usually come with high fees relative to other investment options. Or they may systematically limit upside potential through performance caps and participation rates (meaning how many others invest in it).  For instance, variable annuities have several layers of fees that pay for the underlying insurance features and investment funds, so they are unlikely to keep up with equity indexes in the long run. Fixed-indexed annuities guarantee a minimum return and offer a variable interest rate based on an equity index, but contract features such as a cap, spread, or participation rate limit overall returns to a sustainable level for the insurance company.

So... then there's the new HECM Choice, a new reverse mortgage product that offers guaranteed fixed rate growth without investing a new premium, in fact, you've already purchased it several years ago.  This new and more flexible version can do a whole host of things for the participant- ALL of them providing more cash flow for some uniquely qualified homeowners over 62 years of age.  Unique in that only a certain amount of folks could both qualify and benefit from the new version.  Flexible in that it allows for a homeowner to take their available funds in any way they want; monthly, lump or through a high growth line of credit.

Here's a scenario- a 70 year old homeowner in a $650,000 home could pay off a $135,000 mortgage or other combination of debt (which would free up cash flow), get an additional lump sum of almost $70,000 at closing (more cash flow) and the best part of this lesson- leave a line of credit worth $141,000 that has guaranteed growth of 6.310% per year.  Guaranteed without caps or participation rates or spread.  In 10 years time this same homeowner would have close to $264,000 and if he could take the money in any format he wanted, monthly, a lump or periodic withdrawals as he sees fit.  By the way, he doesn't have to wait 10 years, he can access the money after year one and as long as there is money in the line of credit he would experience 6.310% growth.

So how would someone possibly derive better growth than an annuity without a new investment?  Why, with a reverse mortgage and the new HECM Choice.

Some housekeeping notes:

HECM Choice loan is a loan, endorsed by HUD.  It requires both borrowers to be over 62 years of age to qualify, requires HUD counseling by both borrowers, requires property taxes and homeowners insurance to be paid on time.  Requires a certain percentage of existing debt to qualify.  The loan is paid back after the homeowner dies, sells or can no longer live in the home.  Borrower retains title to home until home is sold.

For more information contact me at 240-506-4611 or rmcinturff@proficiomortgage.com