Wednesday, July 30, 2014

Home equity conversion mortgage loans and uses have evolved

From page C6 | July 12, 2013 |

Jennifer Ousley

American Pacific Reverse Mortgage

With 10,000 Americans turning 62 every day in this country, you can be sure they are thinking about how and when they will be able to retire with enough money to enjoy their retirement. They also want the least amount of stress and worry, and to stay in the homes they worked so hard for. Home Equity Conversion Mortgages, or FHA reverse mortgages, are not just for the most needy cases anymore.

There are 77 million baby boomers gradually entering the senior sector. The Federal Reserve estimates 50 percent of those boomers have no retirement savings. Of those who have saved, the average savings (other than home equity) is about $49,800. But, 80 percent of seniors have substantial equity in their homes and want to stay in their home as long as possible. People are living longer than ever before and the need for a bigger retirement nest egg and access to secure, retirement–long income is growing.

HECM Mortgages (aka FHA insured reverse mortgage), can provide improved cash flow. They can eliminate current monthly payments and they can also provide a monthly income. Utilizing the equity in your home keeps other retirement investments in an improving market so they can continue to grow. One can use home equity as an alternative to drawing down taxable IRA and 401K money.  All income taken through a reverse mortgage is currently income tax-free. A Home Equity Conversion Mortgage (HECM) can allow a senior to live the life they want to live — traveling, helping family members, maintaining one’s dignity and independence.

Another not commonly known advantage to a HECM loan is that it can be used to “purchase” a home.

This will enable seniors to move to the right size home of their needs and have no monthly principal and interest payments. For example a senior can use the benefits of a HECM to downsize to a smaller one level home, upsize to a home of their dreams (or move closer to family).

Many myths abound regarding HECM loans and how they function and their legacy effects. Here are the facts:

  • Holders of HECM loans retain title to their home
  • Debts from the reverse mortgage do not pass on to the mortgagee’s heirs. FHA fully insures the loan so no debt can ever pass to the mortgagee’s heirs
  • Funds can be used for any reason or purpose
  • The loan does not affect or change property taxes
  • All borrowers on title must be 62 years of age or older

Please call for more information and to review your specific situation (no cost or obligation).

Phone: 916-960-5202



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