The $10M Business Owner

He sold his business for $10 million. Then he got a reverse mortgage.

This stops most people I tell it to.

The assumption baked into reverse mortgages is that they're for seniors who ran out of money. The TV ads don't help. Celebrities pitching to "people with too much month and not enough money."

That's not who the program is built for.

This client of mine, mid-70s, sold his business for around $10 million a few years ago. Owned three or four homes across the country at one point. Got rid of all but one. Healthy net worth.

He was looking at a $1.3 million home. He could have paid cash. Walked into closing with no mortgage, no payment, free and clear.

Instead, he looked at me and said:

"Mike, why in the hell would I bury $1.3 million of my money in the ground in this home?"

So we did a HECM for Purchase. He put a portion down. He owns the home outright with no mandatory mortgage payment for the rest of his life. And he kept roughly $700,000 liquid in a line of credit.

That liquid line is now sitting there, growing, ready to pay for in-home care he and his wife will likely need within the next decade.

His health has gone downhill fast since I met him. He doesn't have long-term care insurance. By the time most clients think to buy it, they don't qualify medically.

Without that liquid line, his only options would be to sell the home or burn through other assets.

Here's the part that catches financial advisors off guard:

31% of HECM borrowers nationally are high-income, high-net-worth clients. I've done loans of $1.3 million, $3.5 million. Plenty in the $800K range.

These aren't desperate people. They're sophisticated planners who understand that putting $1 million into a home is the same as moving $1 million from a liquid asset into an illiquid one.

And in retirement, liquidity is the difference between options and panic.

If you're advising clients with significant home equity and you've never considered this option for them, send me a situation. Let's run the math.