Is a Reverse Mortgage (H.E.C.M.) right for you?
WE MAKE IT SIMPLE.
Whether you’re a homeowner exploring the HECM program or a lending professional looking for word-class training and expertise, you’re in the right place!
What is a Reverse Mortgage?
Safe
There is a lot of misinformation out there about HECMs. Educate yourself to make the best decision for your situation.
Valuable
HECMs solve a real problem for people looking to make the most of their investment.
Tax Free
A reverse mortgage is a tax free source of capital for those over homeowners over 65 years old.
Simple
A HECM is simply another mortgage program with specific benefits.
Providing you information you can count on.
HECLOC (home equity line of credit)
versus
HECM (home equity conversion mortgage line of credit)
for Senior Homeowners
HELOC:
Home Equity Line of Credit
- 10-year interest only, then fully amortized
- Must be repaid or refinanced at the end of the term
- Can be canceled by the bank at any time
- Usually have a variable interest rate
- Monthly payments can be difficult after retirement or a reduction of
income
HECM LOC:
Home Equity Conversion Mortgage Line of Credit
- Flexible payment terms
for the life of the LOC - Can NEVER be canceled
- The credit line increases by 50 basis points
each year REGARDLESS of home
value or Fed rates - Tax-free source of capital
- Transfers to spouse upon death
Copyright 2022 Mandelman Matters
Testimonials
More about Martin Andelman
Martin is a KNOWN EXPERT in the HECM/Retirement planning world who has helped hundreds of people realize their retirement dreams.
- Industry expert with decades of experience
- 30 years+ experience as a writer in the financial industry
- Has provided world-class training of thousands of mortgage professionals
- Saved 1000s of homeowners from foreclosure
What are the benefits of a Reverse Mortgage?
How do you use a HECM to protect you against the cost of long-term care? Long-term care is a threat everybody faces nowadays. We are living longer than ever before but that doesn’t necessarily mean we are living healthier, longer than ever before and a lot of people will need long-term care.
Whether that’s a skilled nursing facility, an assisted living setup, or home care.
Long-term care insurance is available and has been available for a years, but a lot of people didn’t buy it. What happens in a lot of cases is people look at it in their fifties and they think it’s a good idea but they had other plans for their money so they didn’t buy it and by the time they are in their 60s or 70s the cost can make it prohibitively expensive and you may not qualify.
If you do end up needing it, having those costs later in life, and you have to pay for them out of your retirement account than you may find that that money is taxable and that really increases the cost of long-term care. You can use a HECM line of credit to protect yourself against those costs. Want to learn more about how it works. Click the link above.
How do you use a HECM to improve your cashflow during or near retirement? It’s simple. For most of our lives our mortgages control us: we have to make that payment every month, no matter what.
There are no mortgage holidays or forgiveness, but with a HECM you don’t. You decide when you want to make a payment and when you don’t.
So let’s say that you hit age 62 and perhaps you haven’t saved enough for retirement and you plan on working until you’re 70 but you haven’t put enough away for the future. Well, you could take your mortgage, switch it over to a HECM, and stop making payments for a while.
Let’s say your payments were $2000 monthly, and instead of putting that toward your mortgage you put it into your bank account. You could expect to save $350,000 – $400,000 during those extra 8 years of work. Having that extra money could be the difference between a happy retirement and one where you are pinching pennies.
Why does Martin say that the HECM Mortgage is safer for older individuals than any other type of mortgage?
It’s because as we get older, stuff happens. We don’t always know what is going to happen. Things happen as we get older that can cost more money than we were planning on spending and the HECM gives you the flexibility of deciding whether you want to make a mortgage payment or whether you want to skip one. Try doing that with a traditional mortgage.
If you’re over the age of 62 and you still have a traditional mortgage, why not think about switching it to a HECM?
Using a HECM to make a major purchase, like a motorhome is a great thing.
How would it work? Let’s say that you own a home and you have about 50% equity in it or more, maybe it’s free and clear and you decide you’d like to buy a motorhome. Spending your retirement years traveling around and visiting relatives and friends and so forth.
Here is what you could do, you could use your HECM Line of Credit. This is the reverse mortgage program and here’s how it would work.
You’d open up a HECM Line of Credit for, let’s just say, for $100,000. Then you’d take that $100,000 and you’d go pay cash for a motorhome. Now, the interest rates are currently low.
Let’s say you drive the motorhome around for 10 years and you would have a loan balance of about $165,000 with interest. Then you could repay the loan however you decided. You could decide never to pay it or maybe it’s time to sell the house and you pay it off with the proceeds and you’d have a free and clear motorhome.
Why doesn’t everybody do that? Why use your cash when you can use a line of credit that is tax-free at a low interest rate and it doesn’t have to be repaid on any certain schedule other than your death or sale of the home.
The other day, I was talking with an attorney that had a client who told him that he didn’t want to get a reverse mortgage because he was told that if he had one that he wouldn’t be able to sell the house.
Now, I know there are a lot of rumors out there about reverse mortgages, none of them are true. The things you hear are kind of crazy and this may be the craziest.
Let me assure you that there is not type of mortgage that prevents you from selling your house. You can always sell your home.
Let’s say that you had a reverse mortgage and the balance was $200,000 and let’s say that the house was worth $500,000. You could sell it anytime you want, you’d simply sell the home, it would pay off the $200,000 balance on the reverse mortgage and then you’d keep the $300,000 that remains after any sales commissions or other costs just like with a traditional mortgage.
