Planning For Your Big Day
By: Bert Karrer
Fairway Independent Mortgage
Reverse Mortgage Planner
Planning your retirement can be a lot like planning for your wedding day. There are many thoughts going through your mind. Do we have enough money to afford this? Is now really the right time? However, for most people that waited longer to retire, they wished they had done it sooner.
Why wait until age 65 or later to retire when it is possible to do it sooner? By using a reverse mortgage loan on your house, you may be able to retire earlier than you thought. Your retirement years are precious, and you deserve more of them. Turning some of the equity you already have built up in your home into usable cash flow could allow you to enjoy retirement at an earlier age.
A reverse mortgage loan is a way to turn a portion of the equity in your home into tax-free* cash without having to make a monthly mortgage payment. The loan becomes repayable when the last borrower permanently moves out of the home or the loan terms no longer are met. According to the U.S. Department of Housing and Urban Development (HUD), more than a million households across the nation are using a home equity conversion mortgage (HECM), one of the most common types of reverse mortgage loan*. By enhance their cash flow, a reverse mortgage can help seniors manage their ﬁnancial increasing living expenses.
A reverse mortgage offers a combination of three different methods to utilize the equity in your home. These options include a lump sum, or tenure payments, and a growing line of credit (growth feature applies to unused funds) that you can use for emergency situations or to help manage your distribution allowance by increasing your cash flow. By selecting the payment solution that fits your needs, you will be ready to enjoy a retirement that you have worked hard for.
A lump sum allows a borrower to take a large portion of the funds that they qualify for. They can use these funds to do whatever they would like. This money will not need to be repaid until they are no longer living in the home. Of course borrower must continue to pay property taxes, homeowner insurance, and maintain the home.
A tenure payment provides borrowers with a fixed monthly payment as long as that is the person’s primary residence and meets all other loan terms. Because the borrower also pays mortgage insurance during the life of the loan, if at some point during the loan the loan balance exceeds the home value, the borrower will still receive the monthly payment.
Line of Credit
A variable interest line of credit is guaranteed to grow regardless of the general economy, interest rates, or the underlying value of the home (growth feature applies to unused funds only). If a borrower takes out a HECM at age 62 instead of 82, it’s possible that the credit line could grow to be greater than the value of the home, if the funds are not used and left to grow, especially in areas of the country where values don’t increase substantially.
Think of all the hard work that went into planning your wedding day. It’s the same concept; it’s best to work with people that have done this that are experts in the field. Ask a local reverse mortgage planner to help you understand the facts and features of a reverse mortgage loan.
* This advertisement does not constitute tax or financial advice. Please consult a tax and/or financial professional for your specific situation. Copyright©2018 Fairway Independent Mortgage Corporation (“Fairway”) NMLS#2289. 4750 S. Biltmore Lane, Madison, WI 53718, 1-877-699-0353. All rights reserved. Fairway is not affiliated with any government agencies. These materials are not from HUD or FHA and were not approved by HUD or a government agency. Reverse mortgage borrowers are required to obtain an eligibility certificate by receiving counseling sessions with a HUD-approved agency. The youngest borrower must be at least 62 years old. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply.