Dreaming of retirement
A home equity conversion mortgage (HECM) can help
How it works
How it works
How it works
How it works
Home equity conversion mortgage
Free up cash,
live better
- No mortgage payments. Just taxes & insurance
- Defer social security and extend retirement
- HECMs are govt. insured and safe
- Age in place and stay forever
RMLOC - reverse mortgage line of credit
Backup for a long life
- Use home equity as a buffer for your retirement portfolio
- Safeguard against an adverse sequence of returns
- Don’t fret about timing your retirement
Coordinate draws from IRAs and HECMs
Protect your wealth
- Take IRA distributions when market returns are positive
- Use the HECM when the market has a bad year
- Give your portfolio time to recover
- Leave a legacy for loved ones
RETIREMENT CALC.
Estate value with coordinated distributions: IRA + Home Equity
$X
Estate value with sequential distributions: IRA > Home Equity
$Y
Net gain in estate worth with portfolio coordination
$Z
Mortgages that pay you
by converting your home’s equity to cover interest payments
Hedge 401Ks
against an adverse sequence of market returns and give portfolios time to recover.
Coordinate withdrawals
between your retirement portfolio and home equity
Stay at home stress-free
Don’t use home equity as a last resort, back-up retirement from the start
Grow your wealth
leave a lasting legacy for for loved ones and charitable causes.
What you need to qualify
HECM cliff notes
Age greater than 62 years
The oldest homeowner must be at least 62 years of age. Co-borrowers can be younger
Home must be the primary residence
The home must meet FHA property standards and be a single-family home; 2-4 home with one unit occupied by you; or a HUD-approved condominium.
Have sufficient home equity
The loan proceeds pay off your current mortgage. The remaining equity is available as a line of credit and grows every month, providing a significant cushion for the future
Pay for property taxes and insurance
Failure to meet minimum monthly obligations could make your loan come due
HECMs are government insured
You can stay in your home forever, even if you use up all the equity. HECMs are government insured. Heirs have the option to buy back the property at (lesser of) 95% of the property value or the loan value
Frequently asked questions
You’ve got questions, we’ve got answers
Are HECMs reverse mortgages?
Yes, HECMs are an FHA insured reverse mortgage that enables homeowners and homebuyers of ages 62 and older to convert some of their home's equity into a line of credit. With a reverse mortgage, no mortgage payments are necessary. You continue to live in and own your home as long as you uphold the terms of the loan.
What are my loan obligations?
Unlike a traditional mortgage, no monthly payments are necessary. The loan is only repaid when the home is sold or the last surviving borrower (or a non-borrowing spouse who meets certain requirements) no longer lives in the home. The homeowners must maintain the condition of the home and stay current with other property costs, including but not limited to taxes and hazard insurance, or else the loan can be called due.
What is retirement portfolio coordination?
The main objective of a coordinated withdrawal strategy is to safeguard and nurture portfolio growth. The core of portfolio coordination is a buffer asset i.e. the reverse mortgage to deviate from fixed annual withdrawals. Instead, retirees dynamically respond to changing market conditions.
- In prosperous market periods, the subsequent year’s withdrawal originates from the investment portfolio.
- During market downturns, the annual withdrawal is momentarily deferred, and the necessary funds are sourced from a designated buffer asset.
The HECM reverse mortgage is a tax efficient buffer asset because proceeds are not taxed as income. Also, the absence of mandatory monthly repayments transforms the reverse mortgage into a cashflow-positive tool, during challenging economic periods.
What are some alternatives to a HECM reverse mortgage?
A HECM isn't the right choice in all financial situations. You should work with a fiduciary advisor to plan your financial future. Some options may include
- Downsize and move: Consider selling your larger or more expensive current home and using the proceeds to move somewhere more affordable.
- Refinance or Cash-out: If your income from Social Security or a pension fund is sufficient, you might consider a traditional home refinance. Reverse mortgages typically do not reflect a home’s fair market value,” because of the potential decline in value and transaction costs of a future sale.
- Open a line of credit: “Optimize your home’s value by locking in a rate for five to seven years,” An interest-only home-equity loan will enable homeowners to borrow money, repay it, and borrow again as needed during their draw period.
Estimate your benefit
Apply for a HECM
