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Use Your Home's Equity to Cushion Your Retirement

Posted by MoneyWisdom Newsletter on Nov 2, 2018 2:32:19 PM

 

Use your home's equity to cushion your retirement

If you’re looking for a way to fill in gaps in your retirement income, the solution may be under your own roof. Hanscom Federal Credit Union is now offering FHA-insured Home Equity Conversion Mortgages (HECMs) to members age 62 and older.

What’s a HECM?

This reverse mortgage loan is an attractive alternative to a traditional Home Equity Line of Credit, or HELOC, and has several distinct advantages for the homeowner who is nearing or at retirement age. As with a HELOC, a HECM lets you retain ownership of your home. But unlike a HELOC, a HECM requires no monthly principal and interest payments, and there’s no pre-defined loan maturity date you have to worry about. It’s a home-secured debt that can be repaid when the last borrower (or protected non-borrowing spouse) sells the home, moves out, or passes away. You can pay down the loan at any time or defer repayment without penalty.

You can take as much time as you want to access the loan. Your line of credit with a HECM stays open and available for whenever you need it. Funds may be taken via a line of credit, a monthly tenure or payment, a lump sum, or a combination. Any unused portion of your credit line grows in size each month, creating even more available funds.

Perhaps one of the most attractive features of a HECM is that you will never owe more than the home’s value at the time the loan must be repaid. Your heirs will not be left with a loan deficiency they have to worry about paying from your estate, leaving you with peace of mind.

There are other eligibility requirements for a HECM besides being age 62 or older. The home must be your primary residence and owned outright or be paid down by a considerable amount. Closing costs can be rolled into the loan and, unlike many other lenders, Hanscom FCU can offer reduced closing costs as low as $999.

You will still be responsible for property taxes, homeowners insurance, and property maintenance, just as you would with any other home secured loan. Your income, assets, monthly living expenses, and credit history will be verified by the credit union, as will timely payment of your real estate taxes, hazard, and flood insurance premiums.

Reverse Mortgage loans are available in all states EXCEPT Alaska, Hawaii, Texas, New York, and North Carolina.  Subject to credit and underwriting approval. This material has not been reviewed, approved or issued by FHA, HUD or any government agency.

Be Informed

If you’re interested in learning more about how our new HECM product can become a strategic part of your future financial plan, log on to www.hfcu.org/reverse-mortgage today.

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Topics: Home, Life Changes

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