A reverse mortgage is a type of loan that allows homeowners ages 62 or older to convert part of their home equity into cash. Generally speaking, these loans are set up as lines of credit that make it possible for the borrower to access cash as they need it.
· The reverse mortgage line of credit is the most popular option among older homeowners that take out a reverse mortgage. According to AARP.com , about “2/3’s of homeowners that use a reverse mortgage, opted for the line of credit option”.
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· Home Equity Conversion Mortgage Line of Credit A Home Equity Conversion Mortgage (HECM), commonly known as a reverse mortgage, is a Federal Housing Administration (fha) insured loan 1 which enables you to access a portion of your home’s equity.
However, one reverse mortgage option has been to establish a HECM line of credit just in case it might be needed in the future. Some companies have been offering this arrangement for a low or almost.
One of my favorite features of the reverse mortgage, and by far the most popular option for borrowers, is the line of credit, or LOC. It provides borrowers the most flexibility in the use of their home equity, along with the most control.
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That strategy calls for setting up a reverse mortgage line of credit as a reserve that a retiree can tap as needed. The falling costs of reverse mortgages heightened the strategy’s appeal in recent.
For homeowners age 62 and older, a reverse mortgage loan may be the answer. Similar in some ways to a traditional home equity loan or home equity line of credit (HELOC), a reverse mortgage loan allows.
As assurance against unforeseen emergencies. While reverse mortgages can be taken as a line of credit, HELOCs are significantly less expensive to do so. If the future is uncertain and the senior has possible large life changes within a few years, HELOCs can offer greater flexibility than a reverse mortgage.
Learn more about Jim at NerdWallet’s Ask an Advisor. There’s a 70% chance that people over 65 will need some kind of long-term care, including services such as home care, assisted living and skilled.
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