*Just Pay Property Expenses, Such as Taxes and Insurance
Here’s How: Obtain a reverse mortgage loan to boost cash flow and ease the strain on your retirement portfolio.†
Most reverse mortgages are Home Equity Conversion Mortgages (HECMs), the only reverse mortgages insured by the Federal Housing Administration (FHA). This webpage discusses HECM loans.
Increase Your Financial Flexibility in Retirement
Market downturns during retirement can pose significant risks to your portfolio. Instead of selling assets at unfavorable prices, you can consider tapping into your home equity to safeguard your traditional retirement funds and allow them the potential to rebound.†
Here’s the good news: You might qualify for a Home Equity Conversion Mortgage (HECM), a reverse mortgage loan insured by the FHA, explicitly designed for homeowners 62 and over.
As a HECM borrower, you can:
Plus, you can use any remaining HECM loan proceeds as you wish,† such as to:
Harness the Power of the HECM Line of Credit
Unlock the full potential of your HECM line of credit by taking advantage of its compounding growth. As the unused portion of the credit line increases, so does your borrowing capacity. By starting your HECM line of credit early, you can enjoy increased financial freedom later in life.
To illustrate, consider the following example based on a monthly interest rate of 6.75% and no withdrawals made:*
(Must pay essential property charges, like taxes and insurance)
*This information is provided as a guideline; the actual reverse mortgage available funds are based on current interest rates, current charges associated with loan, borrower date of birth (and that of eligible non-borrowing spouse, if applicable) the property sales price and standard closing cost. Interest rates and loan fees are subject to change without notice.
Initial Line of Credit: $200,000
In 5 years: $287,070
In 10 years: $412,056
In 20 years: $848,911
How Is the HECM Line of Credit Different From a HELOC?
While a traditional Home Equity Line of Credit (HELOC) may have lower overall costs, a HECM line of credit offers some distinct advantages that can appeal to older homeowners. Here’s a features comparison chart of the two products:
Home Equity Line of Credit (HELOC) | HECM Line of Credit | |
---|---|---|
As an adult, is there a minimum age I need to be? | No | 62+ |
Do the unused funds in the line of credit accrue interest? | No | No |
Are monthly principal and/or interest mortgage payments required? | Yes | No* |
Does the unused portion of the line of credit grow over time to produce greater borrowing capacity? | No | Yes (grows at the same rate as the loan balance) |
Is it a non-recourse loan? (Never owe more than the home is worth when it’s sold)** | No | Yes |
Are the draw periods limited? | Yes. Typically, there’s a 5- or 10-year draw period (timeframe depends on product) | No |
Are there any prepayment penalties? | Depends on product | No |
Which product is generally easier for 62+ homeowners to qualify for? | More difficult | Easier |
Can the line of credit be frozen, reduced or canceled based on market conditions? | Yes | No |
Customer Testimonial: Reverse Mortgage Loan for Home Improvements
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†This material does not constitute tax advice. Please consult a tax advisor regarding your specific situation.
*Source: https://www.cbsnews.com/news/best-reverse-mortgage-companies-2023/