If you’re looking to supplement your current financial situation, a Home Equity Conversion Mortgage (HECM), also known as a reverse mortgage loan, may be able to help. When strategically used, a reverse mortgage can be a valuable means of complementing one’s finances.
A reverse mortgage is a Federal Housing Administration (FHA) insured loan1 for homeowners who are 62 years and older. A reverse mortgage loan allows older adult homeowners to access a portion of their home’s equity into funds that can be used to pay for everyday living expenses, make home improvements, afford medical/prescription costs, cover large or unexpected expenses, or set aside proceeds for an emergency fund.
Benefits of a Reverse Mortgage in Retirement
- Eliminate Monthly Mortgage Payments2: Older adult homeowners can increase their monthly cash flow by eliminating their monthly payments, allowing them to focus on other financial obligations.
- Access to a Low-Cost Line of Credit3: With an adjustable-rate HECM, there is the ability to draw from a line of credit at any time (in any amount) until the line of credit is exhausted, or let it sit and grow over time, allowing access to additional cash if the home value increases.
- Receive Funds in a Lump Sum4: With a fixed-rate HECM, older adults have the option to receive a portion of their home’s equity in a lump sum, often to pay for home improvement projects or to consolidate other debt.
- The Ability to Age in Place5: A HECM allows older adults to age in the comfort of their homes while maintaining ownership and the title.
Are you interested in supplementing your retirement with a reverse mortgage? Call (800) 976-6211 to speak with a licensed reverse mortgage advisor for a free, no obligation loan assessment.
1 As required by the Federal Housing Administration (FHA), you will be charged an up-front mortgage insurance premium (MIP) at closing and, over the life of the loan, you will be charged an annual MIP based on the loan balance.
2 Your current mortgage(s) and any other existing liens against the property must be paid off at or before closing. You must live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.
3 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.
4 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.
5 You must live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.