Reverse Mortgage Line Of Credit Growth

Reverse Mortgage Loans 101

Eligibility:

• Borrower(s) must be 62 years or older • Must be homeowner and either own home outright or have significant equity; must live in home as primary residence • Property must be a single-family home, 2- to 4-unit dwelling, townhouse, planned unit development, modular home, or FHA-approved condo • Minimal credit and property requirements • Must receive reverse mortgage counseling from a HUD-approved counseling agency • Not be delinquent on any federal debt

• Borrower keeps the title to their home • Tax-free cash from a percentage of their housing equity* • Borrower can receive loan proceeds as a onetime lump sum payment at closing; from a line of credit to be drawn as needed; or as fixed monthly advances (term or tenure) • Monthly mortgage payments are optional; however, borrower must live in the home as their primary residence and pay the propertyrelated taxes, insurance, and upkeep expenses. • Loan balance does NOT require repayment until last living borrower permanently leaves the home or loan terms not met • Borrower may choose to sell the property if they so wish

• Neither the borrower nor their estate will owe more than the value of the home at the time it is sold — with FHA-insured non-recourse feature**

• Borrower can use a reverse mortgage to purchase a new home, with 45-65% down from their own funds***

• Generally will not affect Social Security and Medicare*

• Growing line of credit (applies to the unused funds) • If used in a coordinated strategy, may increase value of legacy*

Potential Benefits to Your Clients*:

1. Refinance standard mortgage to a reverse mortgage to eliminate the burden of monthly mortgage payments.

Still required to pay property-related taxes, insurance and maintain the home. 2. Use the HECM line of credit’s growth feature as a way to establish a financial safety net. The unused funds in the line grow at the same compounding rate (interest rate plus 0.50%) as the loan balance. This means your client will have more funds to draw on in the future when needed, such as to pay for health care expenses. 3. Standby portfolio protection — use a reverse mortgage as a cash management tool in stock market down times. This can make investments last longer while net worth will not necessarily decrease. 4. Replaces need for cash reserve bucket – home loans are not taxable income. Can increase cash flow and peace of mind. 5. Can use loan proceeds to purchase long-term care insurance. 6. Use as a management tool to receive deductions when needed or client wants to withdraw less from IRAs and other taxable sources, lower taxes and preserve portfolio reducing client’s risk of outliving their savings. 7. Gifting to family – help family out in need or simply leave a larger legacy. 8. Gifting to non-profits so they can enjoy gifting while they are alive to see the results.

*This does not constitute tax or financial advice. Your clients should consult a tax and/or financial expert for their specific situation. The actual reverse mortgage available funds are based on current interest rates, current charges associated with loan, borrower age (and non-borrowing spouse’s age, if applicable), property sales price (or appraised value, whichever is lower), and standard closing costs. Interest rates and loan fees are subject to change without notice. **There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes and insurance, and maintaining the home. Credit is subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change. ***The down payment required is determined on a number of factors, including borrower(s)’ age (and non-borrowing spouse’s age, if applicable); current interest rates; and the lesser of the home’s appraised value or purchase price