Issue 24.17
In my previous article, I discussed an overview of the four types of Home Equity Conversion Mortgages, or HECM loans: Purchase, Term Loan, Tenure Loan and Line of Credit. In this article, I’m going to explore more on the HECM Tenure and Term loans and how they can be used to potentially increase and extend your retirement savings.
The HECM Tenure loan disburses a fixed monthly payment to you, the borrowers, for as long as you live in the home. The payment amount is based on the available equity in the house and the age of the youngest spouse. It is perfect for the homeowners who want a very dependable monthly payment to supplement their other retirement income. Unlike social security, the monthly payment NEVER DECREASES when one spouse passes away. The surviving spouse will receive that same payment for as long as they live in the home. If, at any future time you decide to sell the home and move to a different location, the HECM loan will be paid off, the monthly payments will stop, and all remaining equity will be paid to you at closing.
Similar to the HECM Tenure loan, the HECM Term loan allows you to receive monthly payments. However, with this loan you have the option of increasing or decreasing the amount of the monthly payment by varying the length of the payment term. For example, if you are facing in-home care expenses, you have the ability to increase the amount of your monthly payments by accepting payments over a shorter term, say 10-15 years instead of a life term. This option gives you better control to match the loan proceeds with your current needs in order to better protect your hard-earned retirement investments.
Using either a HECM tenure or term loan may allow you to keep more of your nest egg productively invested over a longer period of time. This can make a significant difference in the value of an investment portfolio, and can greatly increase your quality of life. Even better, HECM loan proceeds are TAX FREE, potentially saving you even more money.
Remember, a HECM loan is a mortgage that will be repaid through the eventual sale or refinancing of your home. That’s why I always recommend that potential borrowers seek the advice of a qualified, reputable and independent financial planner when they considering the use of a HECM loan to supplement their retirement income. I work with several excellent financial planners and investment advisers in the St. George area and would be happy to offer you multiple suggestions so that you can choose the right person to meet your needs.
Please call me at 435-669-0009 to find out more how either of these loans may help you extend, and increase your retirement funds.
Veritas Funding (NMLS#25108) is an equal Housing Lender. This is not an offer of credit or commitment to lend. Loans are subject to owner/property qualification.