We offer three different kinds of conversion mortgage products to help each client find a loan that best suits their needs. While each reverse mortgage program has its own benefits, the line of credit option has been identified by many in the industry as a sound financial option in retirement as it gives the client much more flexibility.
Reverse Mortgage Line of Credit (RMLOC)
This loan option allows you to put your proceeds in a line of credit and use them whenever you need. If you don’t need the money right away, save it for an unexpected cost in the future. Any unused funds that remain in the line of credit increase in value over time.
Or, you can draw a lump sum or take monthly payments from your line of credit to pay off debt or defer use of other retirement assets. Deferring use of other assets gives them more time to grow in value.
With the RMLOC, you have financial flexibility. You can make payments on your loan, but you do not have to.* You are only required to pay back the loan when it comes due. You also have the choice of drawing only as much money as you want when you want to draw it. The best part of that is you will only accrue interest on the money you draw on.
You also have the option of paying into your line of credit. That could mean paying back what you withdrew or adding money to the line of credit to help it grow.
When it comes to declining market values, you do not have to worry about the money in your line of credit. The value of your line of credit is not dependent on the housing market. It can even continue to rise despite a declining market.
While many financial advisors are recommending the line of credit, it is important to remember that it may not be for everyone. As with any conversion mortgage program, there are things to consider. It is important to educate yourself on how the loan can benefit you and how it fits into your financial plan. The best way to educate yourself is to take a look at the educational resources we have on our site and to call one of our licensed specialists who can give you tailor the information you need to your specific situation.
*Homeowner is still responsible for taxes, insurance and property maintenance.