The Home Equity Conversion Mortgage (HECM) Program, commonly known as a reverse mortgage loan, experienced many significant changes in the recent years, improving the product for those wishing to age in place. Changes to the borrowing limits, the inclusion of mortgage insurance1 and financial counseling, as well as stricter financial screenings were made to improve the product.
Loan Proceeds and Increased Cash Flow
Seniors have several disbursement options at their disposal to choose from with a reverse mortgage.1
Lump Sum: Fixed-rate reverse mortgages offer funds in a lump sum making greater funds available up front.2
Line of Credit: Offers easy access to funds in any amount or frequency with interest only charged on what’s used. The funds also automatically increase over time in accordance with the annual growth rate.3
Term or Tenure: Monthly payments are also an option for those wishing to stimulate cash flow for regular expenses.
The monthly term option can be combined with a line of credit for those who could benefit from both. The payout method can also be changed at any time for an additional fee if circumstances change.4
What if you don’t plan to stay in your home?
Seniors who have plenty of equity but would rather retire elsewhere also have the option to purchase a new home with a reverse mortgage. A reverse for purchase loan can be a great opportunity for those looking to “right-size” into their retirement home, offering all of the benefits of a reverse mortgage.
Using a reverse mortgage to purchase a home can help by:
- Increasing your purchasing power
- Paying less up-front than a cash purchase
- Right-sizing to a lower maintenance home
- Buying a home closer to family or friends
- Re-locating to a senior housing community
Whatever the need may be, a reverse mortgage can offer flexible options for seniors to gain access to equity in their home. If you or a loved one is interested in learning more, call (800) 976-6211 to speak with a licensed reverse mortgage specialist and get a free same-day and no obligation loan assessment.
1 The Max Claim Amount (MCA) is based on the lesser of your home’s value, the current maximum lending limit set by the Federal Housing Administration (FHA), or the purchase price (if purchasing a new home).
2 The funds available to you may be restricted for the first 12 months after loan closing. In addition, you may be required to set aside additional funds from the loan proceeds to pay for taxes and insurance.
3 The funds available to the borrower may be restricted for the first 12 months after loan closing, due to HECM reverse mortgage requirements. In addition, the borrower may need to set aside additional funds from the loan proceeds to pay for taxes and insurance. This disbursement option is only available for a fixed rate loan.
4 The reverse mortgage loan balance grows at the same rate as the available line of credit. Line of credit growth occurs and is only a benefit when a portion of the line of credit is not used. The unused line of credit grows over time and more funds become available during the life of the loan.
5 Only available on adjustable rate HECM loans