Why Now is a Good Time as Ever to Take Out a Reverse Mortgage Loan
Growing cost of living, increased interest rates, historically high fuel prices — for the average American, 2022 has been an expensive year.
Mortgage rates continue to rise, But despite higher rates, a reverse mortgage may still be a good idea for the right candidate.
If you’re an older homeowner looking to leverage your home equity, could it make sense to consider a reverse mortgage loan now? Yes. And at Reverse Mortgage Funding LLC (RMF), we’re happy to explain why…
Seeing the big picture
When you take out a Home Equity Conversion Mortgage (HECM), commonly known as a reverse mortgage loan, you’re able to access the equity you’ve built up in your home all while continuing to live in it and retain ownership. (Of course, you need to keep current on loan obligations including maintenance, insurance and property taxes — just as you do today.)
As a borrower, your interest rate depends on a variety of factors, including your age, life expectancy, the home’s value and your disbursement option. Interest is typically repaid when the loan becomes due and payable. This occurs when the last borrower (or eligible non-borrowing spouse) on the loan passes away , moves out or otherwise fails to meet the loan obligations.
But if you’re living in the present while planning for the future, the benefits of a reverse mortgage may outweigh temporary interest hikes:
Quick access to cash. Retirement changes cash flow. A reverse mortgage loan allows you to leverage your home equity as †a lump sum, monthly payments or a line of credit. So if you need fast cash to pay for medical bills, cover a home renovation or take a vacation to celebrate your retirement, this type of loan can deliver.
Investment protection. Most investment earnings are down while inflation is high. By spending home equity before drawing on your investments, you can let your investments continue to grow, reducing the need to take distributions when the portfolio is underperforming, or when assets would need to be sold at a loss. As with any mortgage, you must meet your loan obligations, keep current with property taxes, insurance, and maintenance.
The chance to refinance later. Generally speaking, the higher your interest rate, the lower your principal limit. But that doesn’t necessarily mean you’re locked in forever. If you’re looking to cash in on the financial benefits of a reverse mortgage now, you can, if eligible, refinance later if the rates drop.
Growth potential. If your reverse mortgage lender determines you have $300,000 available through a reverse mortgage, but you only need $100,000, that leaves $200,000 that you can leave in a line of credit that’s available if and when you need it. The growth rate for those HECM funds also changes along with any rate ‡change. So if you happen to have a significant amount of money in your reverse mortgage line of credit, increasing interest rates allow that money to multiply quickly.
Seeing opportunity, not obstacles
If you’re an older homeowner or homebuyer, a reverse mortgage loan can provide greater financial flexibility and security for the years ahead — despite whatever today’s rates may be. To learn more, give RMF a call at (888) 277-1567. We look forward to discussing your options to live a comfortable retirement.
This content is sponsored by RMF, one of the nation’s leading reverse mortgage lenders. We are dedicated to helping older Americans live the retirement lifestyles that they imagined and deserve, in the comfort of their own homes. As a result of our commitment to providing an extraordinary and positive customer experience, we have earned a 98% customer satisfaction rating; a 5-star / Excellent score on Trustpilot; 4.5 out of 5 stars on LendingTree; and an A+ rating with the Better Business Bureau. Call (888) 277-1567 to speak with one of our experienced reverse mortgage specialists to learn about our retirement financing products and solutions.
†Borrowers who elect a fixed rate loan will receive a single disbursement lump sum payment. Other payment options are available only for adjustable rate mortgages. In certain states, RMF’s EE loan provides a fixed-rate term payment option.
‡If part of your loan is held in a line of credit upon which you may draw, then the unused portion of the line of credit will grow in size each month. The growth rate is equal to the sum of the interest rate plus the annual mortgage insurance premium rate being charged on your loan.