Whether your goal is to pay off your mortgage and defer other retirement assets or to just improve your retirement plan by being able to access more money, there’s likely a reverse mortgage option that suits your goals. Reverse mortgages have a few variations that can uniquely accommodate several people’s individual situation. The freedom that comes with a HECM is one aspect that sets this program apart from traditional mortgages. Below are three reverse mortgage products that have helped thousands of retirees.
Adjustable Rate HECM
This product allows you to receive your loan’s proceeds in the form of a line of credit, through monthly disbursements, as a lump sum, or as any combination of the three. If you choose the line of credit option, know that you are not required to take any money out once it first becomes available to you upon closing. Some people even wait a few years to take out of the line of credit to allow the available funds to grow over time. If you decide to let your funds grow, you can get access to more money in the future.
Fixed Rate HECM
A fixed rate HECM pays out your equity in one lump sum and locks the interest rate in place at the time of closing. This ensures that the rate is the same throughout the duration of the loan. Clients often use this loan option to pay off their mortgage balance (while still paying their property taxes and insurance), pay medical bills, or to take care of essential home repairs.
HECM for Purchase
A HECM for Purchase is an option that allows you to purchase a new home with a reverse mortgage and not have to make a monthly payment as long as you live there. Of course, you still need to pay your property taxes, homeowners insurance, and home maintenance costs. Similar to the other reverse mortgage products, you are not required to repay the loan until the last remaining borrower vacates the home; this means once you move, sell the home, or pass away, the loan will come due. This is generally why getting a HECM is most common among people who want to stay in their home for the remainder of their life. One of the most unique aspects of this program is that if the home sells for less than what is owed on the loan when it comes due, FHA insurance takes care of the difference. Many retirees use this product to downsize or buy a home that better suits their physical needs, is closer to family, or is in a warmer and more desirable climate.
To get a better idea of which reverse mortgage product is best for you, call one of our licensed specialists to discuss your specific needs and goals.