After 30 years in the financial services I can tell you that a reverse mortgage is a unique tool. The formal name or a Reverse Mortgage is HECM or Home Equity Conversion Mortgage. There is truly no other financial product that has as many valuable features that are applicable in a financial crisis. That crisis can be personal or could be an economic crisis occurring worldwide.
- No Job Needed – You can retire from your job and need access to liquidity and your assets. One of those assets that is kind of useless is home equity because it just sits there. Normally you cannot access that equity. A Reverse Mortgage gives you a way to tap into liquidity right away. To find a local resource try searching for a reverse mortgage broker near me.
- You can eliminate all required debt payments – You might have a mortgage, you could have car payments, or anything else that is a monthly payment. A Reverse Mortgage allows you to eliminate those payments right now, improving your cash flow immediately.
- With a Reverse Mortgage, your access to liquidity continues to grow even in a declining real estate market. We do not know what is going to happen to markets over time, but we do know that there could be ups and downs and we could experience a unique challenge if the real estate market actually goes down. But with a HECM – equity is protected and in fact grows regardless of home value.
Lenders only look at three items to determine how much money you can borrow on a Reverse Mortgage (HECM).
- You must be at least 62 years old. There are some newer options for people that are under 62 but over 60.
- The current mortgage balance needs to be under the amount that you qualify for with a HECM mortgage. There is financial assessment where the lender looks at your credit, income, and assets.
- Home Value. For the HECM the home value is limited to the FHA loan limit in the area in which you live, which can be limited. Be aware, that there are other products available for higher price homes.
Reverse Mortgage Features Include:
- Monthly income payments
- Eliminate monthly payments
- Growing line of credit for liquidity (insured by HUD)
- Lump sums (non-taxable) for any purpose
- Allow you to not sell stocks in a down market and use the line of credit feature instead
- Bridge an income gap until a crisis has passed
- Line of credit can never be taken away
- You can never owe more than the home is worth
- The ability to stay in your home for life
It really is an amazing tool. It has always been a great tool, but as we learn during a financial crisis having access to a tool like this can be a lifesaver.
HECM Summarized:
A reverse mortgage is a unique tool, especially in a financial crisis! To summarize the major points once again:
- No job needed
- Eliminate all payments
- Access liquidity, even in a declining market
Learn more and contact us HERE.
