Dreaming of retirement?

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.

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.

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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.

1. In prosperous market periods, the subsequent year’s withdrawal originates from the investment portfolio.
2. 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.

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

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1. Downsize and move: Consider selling your larger or more expensive current home and using the proceeds to move somewhere more affordable.
2. 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.
3. 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.