Is converting a standard mortgage into a reverse mortgage a good idea? The letter below started me thinking about this question.
“Will I be better off 10 years down the road if I take out a reverse mortgage in order to pay off the balance on my standard mortgage? I am paying 3 percent on that mortgage, and have been told that reverse mortgages are available at 2.5 percent or less. If I did this, I would invest the $2,107 I am now paying monthly for principal and interest. I am 76, the house I live in is worth $626,000, and my current mortgage balance is $380,000.”
I decided that whether this shift made sense depended heavily on the objectives of the senior borrower. Broadly, they fall into two groups.
The author of the letter asks whether transitioning to a reverse mortgage would make him wealthier in 10 years than staying with his current mortgage. He is a “wealth maximizer,” probably because he is looking ahead to sell his home at some point, or wants to leave as large an estate as possible. But paying off his mortgage with the proceeds of a reverse mortgage would reduce his wealth.
If he stays with his mortgage, his $380,000 balance would be paid down to $218,253 in 10 years. If instead he pays off the balance now with the proceeds from an adjustable rate HECM, available at 2.154 percent, in 10 years he will owe $704,343. Investing the monthly payment of $2,107 at 1 percent, which is about the highest super-safe return that is available today, would generate $218,253 over 10 years. But that leaves him with $267,837 less wealth than if he had stayed with the standard mortgage.
read more: http://triblive.com/business/headlines/7444532-74/mortgage-percent-reverse#axzz3Nyyq8j4Z
Monday, January 5, 2015
Friday, January 2, 2015
About James Clooney
Possessing nearly 30 years of experience, James Clooney is a veteran investment professional. Jim Clooney began his career as a Junior Auditor at Arthur Young International, known today as Ernst & Young, one of the world’s Big Four international auditing firms. Within less than a year, James Clooney was recruited as a Senior Auditor at Touche Ross, which today is part of Deloitte Touche Tohmatsu Limited, another one of the Big Four.
Jim Clooney served in that capacity until he was brought on board at Prudential Securities as an Account Executive in 1983. As the number-two trainee in the company, James Clooney excelled in his capacity as an Account Executive at Prudential Securities. In 1984, Jim Clooney was recruited by Lehman Brothers Holdings, Inc. to serve as Assistant Vice President of Brokerage. As a result of James Clooney’s skill, he was recruited by UBS in 1984 to serve as Assistant Vice President of Brokerage, a position he held until 1986. During his tenure, James Clooney managed $7.5 million in equity and was the second-most productive salesperson in his office in 1986.
As a result of James Clooney’s success, he was recruited by Salomon Smith Barney in 1986 to function as Vice President. In this capacity, James Clooney managed $10 million in equity and was the top salesperson in his office in 1987. In 1989, Jim Clooney moved on to join Biltmore Mortgage as President of Brokerage, running all operations. It earned the distinction of being the fastest growing brokerage firm in Melville, New York, from 1989 to 1992.
Departing from Biltmore Mortgage, James Clooney joined the CVO/JEC Consulting Corporation as President, a position he held until 2009. During his tenure, James Clooney held responsibility for directing the successful company in delivering effective consulting financial services, marketing, and sales. Under James Clooney’s leadership, CVO/JEC Consulting was recognized as the fastest-growing online mortgage bank from 2002 to 2008.
James Clooney left CVO/JEC in 2008 to become Principal of Total Solutions Advisors, Inc. Since 2008, James Clooney has acted as Principal for Real Estate for Total Solutions Advisors, seeing to the marketing needs of real estate and consumer finance companies. Under James Clooney’s leadership, the company is currently rated Best ROI in Mortgage Marketing. A fan of the works of John Steinbeck, James Clooney is a supporter of the East Norwich Fire Department. James Clooney is also an avid tennis player who holds National Senior ranking.
Jim Clooney served in that capacity until he was brought on board at Prudential Securities as an Account Executive in 1983. As the number-two trainee in the company, James Clooney excelled in his capacity as an Account Executive at Prudential Securities. In 1984, Jim Clooney was recruited by Lehman Brothers Holdings, Inc. to serve as Assistant Vice President of Brokerage. As a result of James Clooney’s skill, he was recruited by UBS in 1984 to serve as Assistant Vice President of Brokerage, a position he held until 1986. During his tenure, James Clooney managed $7.5 million in equity and was the second-most productive salesperson in his office in 1986.
As a result of James Clooney’s success, he was recruited by Salomon Smith Barney in 1986 to function as Vice President. In this capacity, James Clooney managed $10 million in equity and was the top salesperson in his office in 1987. In 1989, Jim Clooney moved on to join Biltmore Mortgage as President of Brokerage, running all operations. It earned the distinction of being the fastest growing brokerage firm in Melville, New York, from 1989 to 1992.
Departing from Biltmore Mortgage, James Clooney joined the CVO/JEC Consulting Corporation as President, a position he held until 2009. During his tenure, James Clooney held responsibility for directing the successful company in delivering effective consulting financial services, marketing, and sales. Under James Clooney’s leadership, CVO/JEC Consulting was recognized as the fastest-growing online mortgage bank from 2002 to 2008.
James Clooney left CVO/JEC in 2008 to become Principal of Total Solutions Advisors, Inc. Since 2008, James Clooney has acted as Principal for Real Estate for Total Solutions Advisors, seeing to the marketing needs of real estate and consumer finance companies. Under James Clooney’s leadership, the company is currently rated Best ROI in Mortgage Marketing. A fan of the works of John Steinbeck, James Clooney is a supporter of the East Norwich Fire Department. James Clooney is also an avid tennis player who holds National Senior ranking.
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