Access Home Equity With No Monthly Mortgage Payments! Just Pay the Property Charges, Like Taxes and Insurance
Here's How: Obtain a reverse mortgage loan to boost cash flow and ease the strain on your retirement portfolio.†
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Most reverse mortgage loans are Home Equity Conversion Mortgages (HECMs), the only reverse mortgages insured by the Federal Housing Administration (FHA). This webpage discusses HECM loans.
Eliminate Monthly Mortgage Payments
You still must pay property-related taxes, insurance and upkeep expenses.
Access Equity as Cash
Access a portion of your home’s equity without incurring income tax.†
You Own Your Home
You remain on title and own your home so long as you meet the loan obligations.
Increase Your Financial Flexibility in Retirement
Market downturns during retirement can pose significant risks to your portfolio. Instead of selling assets at unfavorable prices, you can consider tapping into your home equity to safeguard your traditional retirement funds and allow them the potential to rebound.†
Here's the good news: You might qualify for a Home Equity Conversion Mortgage (HECM), a reverse mortgage loan insured by the FHA, explicitly designed for homeowners 62 and over.
As a HECM borrower, you can:
- Access a percentage of your home equity as cash, fixed monthly payments or a line of credit.
- Use HECM funds to refinance (pay off) a traditional mortgage (if you still have one).
- Choose how much or little to pay toward the loan each month or defer payments entirely while living in your home. You must maintain the home and cover property charges such as taxes and insurance.
Plus, you can use any remaining HECM loan proceeds as you wish, such as:
- Using the available line of credit as standby portfolio protection. For instance, you could use a reverse mortgage to enhance your cash flow in economic downtimes, potentially making your investments last longer while your net worth won’t necessarily decrease.
- Coordinating between spending from your investments and your reverse mortgage.
- Establishing a rainy-day fund.
- Paying for in-home care, long-term care or medical expenses.
- Paying for aging-in-place renovations.
Harness the Power of the HECM Line of Credit
Unlock the full potential of your HECM line of credit by taking advantage of its compounding growth. As the unused portion of the credit line increases, so does your borrowing capacity. By starting your HECM line of credit early, you can enjoy increased financial freedom later in life.
To illustrate, consider the following example based on a monthly interest rate of 6.75% and no withdrawals made:*
- Initial Line of Credit: $200,000
- In 5 years: $287,000
- In 10 years: $412,056
- In 20 years: $848,911
How Is the HECM Line of Credit Different From a HELOC?
While a traditional Home Equity Line of Credit (HELOC) may have lower overall costs, a HECM line of credit offers some distinct advantages that can appeal to older homeowners. Here’s a features comparison chart of the two products:
| Home Equity Line of Credit (HELOC) | HECM Line of Credit | |
|---|---|---|
| As an adult, is there a minimum age I need to be? | No | 62+ |
| Do the unused funds in the line of credit accrue interest? | No | No |
| Are monthly principal and/or interest mortgage payments required?1 | Yes | No1 |
| Does the unused portion of the line of credit grow over time to produce greater borrowing capacity? | No | Yes (grows at the same rate as the loan balance) |
| Is it a non-recourse loan? (Never owe more than the home is worth when it’s sold)2 | No | Yes2 |
| Are the draw periods limited? | Yes. Typically, there’s a 5- or 10-year draw period (time frame depends on product) | No |
| Are there any prepayment penalties? | Depends on product | No |
| Which product is generally easier for 62+ homeowners to qualify for? | More difficult | Easier |
| Can the line of credit be frozen, reduced or canceled based on market conditions? | Yes | No |
2There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes and insurance and maintaining the home. Credit subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.
Customer Testimonial: Integrating a Reverse Mortgage Into a Strategic Retirement Plan
Why Fairway Independent Mortgage Corporation?
Fairway Independent Mortgage Corporation is a national mortgage lender with top-notch customer service.
We're committed to providing an amazing experience – from loan application to closing, and beyond
- We're a national, full-service lender with high customer satisfaction scores
- We're ranked as one of the top 10 mortgage companies in America by Mortgage Executive Magazine
- As an FHA-approved lender, we can sell HECM reverse mortgages
- We’re dedicated to educating consumers, as well as their family members and other trusted advisors, on the pros and cons of reverse mortgages
Schedule an Appointment With Us Today!
Call us or complete the form below to schedule a free consultation. Together, let’s find out if leveraging home equity is the right move for you and your retirement.
†This material does not constitute tax advice. Please consult a tax advisor regarding your specific situation.
*Source: cbsnews.com/news/best-reverse-mortgage-companies-2023