Benefits of a Reverse Mortgage
The main advantage of a Home Equity Conversion Mortgage (HECM) Reverse Mortgage, is eliminating traditional mortgage payments and/or obtaining monthly income by accessing the home equity while still owning and living in the home.
A HECM Reverse Mortgage can be an ideal way to create financial peace of mind, increase monthly income and financial security in retirement.
Key advantages and benefits of a HECM Reverse Mortgage include:
Not Solely Based on Credit Score or Income
HECM Reverse Mortgages have limited income and credit score requirements. The loan is not based solely on credit score or income, however under Financial Assessment Rules you will need to demonstrate a capacity to maintain the home and pay property taxes, homeowner’s insurance and HOA dues.
The HECM Reverse Mortgage is a tremendously flexible loan 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. o a Reverse Mortgage/Home Equity Conversion.
Low Risk of Default
Unlike a home equity loan, with a HECM Reverse Mortgage, your home cannot be taken from you for reasons of non-mortgage payment. There are no monthly mortgage payments, and the loan does not have to be repaid until you permanently leave the home. However, you must maintain the home and pay property taxes, homeowner’s insurance and HOA dues.
With a HECM Reverse Mortgage, you will never owe more than your home’s value at the time the loan is repaid. This is true even if the loan balance is greater than the home value. This is a particularly useful advantage especially if home values decrease.
How you use the funds from a HECM Reverse Mortgage is up to you – go traveling, home improvements, medical expenses, purchase long term care insurance, financially help children or grandchildren, or simply save for a rainy day – anything goes.
Flexible Payment Options
Depending on the type of loan you choose, you can receive the HECM Reverse Mortgage funds in the form of a lump sum, monthly payments, credit line or some combination of these.
With a HECM Reverse Mortgage you remain on title and retain home ownership to continually live in your home. You are required to adhere to the loan obligations: maintaining the home and keeping current the property taxes, homeowner’s insurance and HOA dues.
The HECM Reverse Mortgage is managed by the Department of Housing and Urban Affairs (HUD) and is federally insured. This is important as in the event your HECM Reverse Mortgage lender defaults, you’ll continue to receive any established monthly payments.
Preserve Your Wealth
Depending on your circumstances, there are a variety of ways that a HECM Reverse Mortgage can help you preserve your wealth. Many financial advisors recommend this loan product to:
Preserve and increase the value of your home equity
If you set up your HECM Reverse Mortgage funds in a Line of Credit, the Line of Credit grows monthly. This locks in your current home equity and the Line of Credit will continue to grow, even if future real estate values decline.
Personal finance can be complicated. You want to maximize returns and minimize losses. A HECM Reverse Mortgage can be a valuable tool in your financial toolbelt to maximize your overall wealth.