Benefits of a Reverse Mortgage

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The main advantage of a Reverse Mortgage or Home Equity Conversion Mortgage (HECM) is that you can eliminate your traditional mortgage payments and/or access your home equity while still owning and living in your home.

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Given the right set of circumstances, a Reverse Mortgage/Home Equity Conversion Mortgage (HECM) can be an ideal way to increase your spending power and financial security in retirement.

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Key advantages and benefits of a Reverse Mortgage/Home Equity Conversion Mortgage (HECM) include:

-Not Solely Based on Credit Score or Income
One of the most advantageous benefits of a Reverse Mortgage/Home Equity Conversion Mortgage (HECM) is that there are limited income and credit score requirements. Under the New Financial Assessment Rules you will need to demonstrate a capacity to continue paying taxes and insurance on the home.

-Flexibility
The Reverse Mortgage/Home Equity Conversion Mortgage (HECM) is a tremendously flexible product that can be utilized in a variety of ways for a variety of different types of borrowers. Households who have a financial need can tailor the product to de stress their finances. Households with adequate resources might consider the product as a financial planning tool.

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-Stay in Your Home and Improve Your Immediate Finances:
The key to a Reverse Mortgage/Home Equity Conversion Mortgage (HECM) it that it enables you to live in your home for as long as you want with absolutely no monthly mortgage payments (borrowers must remain current on their property taxes, homeowner’s insurance and HOA dues) and – in many cases – you can also get access to money to use for any purpose.

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-Low Risk of Default
Unlike a home equity loan, with a Reverse Mortgage/Home Equity Conversion Mortgage (HECM) your home can not be taken from you for reasons of non-payment – there are no payments on the loan until you permanently leave the home. However, you must continue to pay for upkeep and taxes and insurance on your home.

-Limited Downside
With a Reverse Mortgage/Home Equity Conversion Mortgage (HECM), you will never owe more than your home’s value at the time the loan is repaid, even if the Reverse Mortgage/Home Equity Conversion Mortgage (HECM) lenders have paid you more money than the value of the home. This is a particularly useful advantage if you secure a Reverse Mortgage/Home Equity Conversion Mortgage (HECM) and then home price declines.

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-Tax Free
As a Reverse Mortgage/Home Equity Conversion Mortgage (HECM) is a loan, the money from it is typically tax-free, whether you receive it as fixed income or in a lump sum.

 

-No Restrictions
How you use the funds from a Reverse Mortgage/Home Equity Conversion Mortgage (HECM) is up to you – go traveling, get a hearing aid, purchase long term care insurance, pay for your children’s college education, or simply leave it sitting for a rainy day – anything goes.

-Flexible Payment Options
Depending on the type of loan you choose, you can receive the Reverse Mortgage/Home Equity Conversion Mortgage (HECM) loan money in the form of a lump sum, monthly payments, credit line or some combination of the above.

-Home Ownership
With a Reverse Mortgage/Home Equity Conversion Mortgage (HECM), you retain home ownership and the ability to live in your home. As such you are still required to keep up insurance, property taxes and maintenance for your home.

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-Guaranteed Place to Live
You can live in your home for as long as you want when you secure a Reverse Mortgage/Home Equity Conversion Mortgage (HECM) .

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-Federally Insured
The Home Equity Conversion Mortgages (HECM) is managed by the Department of Housing and Urban Affairs and is federally insured. This is important since even if your Reverse Mortgage/Home Equity Conversion Mortgage (HECM) lender defaults, you’ll still receive your payments.

-Can Preserve Your Wealth
Depending on your circumstances, there are a variety of ways that a Reverse Mortgage/Home Equity Conversion Mortgage (HECM) can help you preserve your wealth. Some financial planners are recommending Reverse Mortgage or Home Equity Conversion Mortgages (HECMs) to:

-Preserve and increase the value of your home equity
If you take your loan amount as a Home Equity Line of Credit, then this Reverse Mortgage/Home Equity Conversion Mortgage (HECM) Line of Credit grows annually. This locks in your current home value, and your Reverse Mortgage/Home Equity Conversion Mortgage (HECM) line of credit over time might be larger than future real estate values if the market goes down.

-Maximize wealth
Personal finance can be complicated. You want to maximize returns and minimize losses. A Reverse Mortgage/Home Equity Conversion Mortgage (HECM) can be one of the levers you use to maximize your overall wealth.