Ted Butler on The Reverse Mortgage Podcast |Modern Reverse Mortgage
The Truth About Reverse Mortgages: What Even Top Professionals Don’t Know
In a new interview, reverse mortgage expert Ted Butler, also known as “The Voice of Reverse Mortgage,” sits down to clear the air on a misunderstood topic. Beyond being a loan for those in need, the modern reverse mortgage is a powerful financial tool.
Here are the key takeaways for homeowners and professionals alike.
Not Just for the “Needs-Based” Anymore
Many people still believe a reverse mortgage is a last resort for homeowners in financial distress. However, Ted Butler explains that the product has evolved into a sophisticated tool used by affluent clients and multi-millionaires.
Today, a reverse mortgage is often used as a strategic asset to preserve wealth, create a steady income stream, or simply improve an existing financial plan. It’s a choice made to optimize financial security, not out of desperation.
Why Use a Reverse Mortgage to Buy a New Home?
For those looking to purchase a new home in retirement, paying cash is a common option. But Ted argues that using a reverse mortgage for a home purchase is a smarter financial move.
Dubbed a “Lifestyle Home Loan,” this product allows homeowners to preserve more of their liquid assets. This is especially useful for unexpected future expenses or simply to afford a nicer home. A reverse mortgage for purchase also eliminates the need for monthly mortgage payments, a significant benefit for retirees on a fixed income.
Overcoming the Stigma: The New, Safer Product
Ted Butler directly addresses the negative stigma associated with reverse mortgages, explaining its origin. The early versions of the product were not federally regulated and sometimes included predatory “equity share provisions” that took away a homeowner’s equity.
The modern reverse mortgage, however, is a reformed, federally insured product. It is a completely different program from its predecessor, built with senior homeowners in mind to be safe and transparent. It’s important for professionals and consumers to learn the facts about this new, regulated program.
The Role of Professionals
Both Ted and the interviewer emphasize the critical role real estate agents and financial planners play in educating their clients about reverse mortgages. Professionals who understand the product are better equipped to help their clients make the most informed financial decisions.
Ted also highlights the responsibility of loan officers to maintain long-term relationships with clients. By checking in annually and discussing estate planning, they can ensure a smooth transition for the client’s family and provide crucial guidance.
The Number One Benefit: Peace of Mind
In a study of thousands of homeowners who used a reverse mortgage, the top reported benefit wasn’t financial; it was peace of mind.
Knowing they have access to their home’s equity and are free from monthly mortgage payments alleviates the fear of running out of money in retirement. This emotional and psychological benefit is often the most important outcome of all.
