Retire and Prosper

Are you a homeowner looking for ways to supplement your retirement income and ensure that you can maintain your standard of living in your golden years? One option you might want to consider is a Home Equity Conversion Mortgage, or HECM.

A HECM is an FHA guaranteed type of reverse mortgage that allows homeowners aged 62 or older to convert a portion of their home equity into cash. Unlike a traditional mortgage, with a HECM, the borrower does not have to make monthly mortgage payments, and the loan is typically repaid when the home is sold.

So why might a HECM be a key part of your retirement strategy? Here are a few reasons:

1. Supplemental income: For many retirees, Social Security benefits and retirement savings may not be enough to cover all their expenses. With a HECM, you can access the equity in your home to provide additional income to help meet your needs.

2. Flexibility in how funds are used: Unlike some other retirement income sources, there are no restrictions on how you can use the funds from a HECM. You can use the money to pay off existing debts, cover medical expenses, make home improvements, or any other expenses you may have.

3. Continued ownership and occupancy of the home: With a HECM, you can continue to live in your home as long as you maintain the property, pay property taxes and insurance. This can provide peace of mind, as you do not have to worry about moving out of your home in your retirement years.

4. Non-recourse loan: A HECM is a non-recourse loan, which means that the lender cannot seek payment from any other assets owned by the borrower or their heirs. This can provide protection and peace of mind for you and your loved ones.

But wait, there’s more!

One of the most desirable key features of a Home Equity Conversion Mortgage (HECM) is that it includes a line of credit that can grow over time, providing a valuable source of funds for homeowners aged 62 or older.

Here's how it works: when you take out a HECM, the amount of the line of credit is based on a formula that takes into account your age, the value of your home, and current interest rates. This means that the older you are and the more equity you have in your home, the larger your line of credit will be.

What makes a HECM line of credit unique is that it can actually grow over time, even if you never use it. This is different and arguably better than a HELOC, home equity line of credit, where the line of credit is locked in at the time the loan is created and even as payments are made back on the loan, the amount available decreases. Whereas with the HECM line of credit, all payments – though they are not obligatory – are put back into the available loan amount which also continues to grow at the current interest rate of the loan plus 0.5%. If you are interested in the current interest rates for a HECM line of credit reach out to us below.

This growth feature can be especially valuable in retirement, as it provides a source of funds that can be used to cover unexpected expenses or to supplement your income. And because the line of credit is a "standby" source of funds that you use at your discretion, you can have peace of mind knowing that it is available if and when you need it.

A home equity conversion mortgage can be a valuable tool in your retirement planning toolbox. It can provide supplemental income, flexibility, and peace of mind, allowing you to enjoy your retirement years without financial stress. If you're interested in learning more, be sure to contact us below to see if a HECM is the right option for you, all information comes with no obligation to commit to a loan. We specialize in home equity conversion mortgages and reverse mortgages.