Two Excellent Articles on Reverse Mortgage Lines Of Credit

Number One Is By Jason Oliva Published In the Reverse Mortgage Daily

Some items that he mentioned from a study by the Funding Longevity Task Force are:

1. Using the Line of Credit rather than using a HECM Reverse Loan as a last resort significantly increases the likelihood of a retirement portfolio’s success

2. The line of credit grows based on the interest rate at the time so another debacle in real estate values does not affect the increases. The line of credit could become higher than the home value.

3. Can help retirees delay drawing from Social Security.

4. Two common reactions among advisors according to the article is that this is too good to be true and why isn’t everyone doing this. 

Number Two Is By Wade Pfau Published In Tools for Retirement Planning

Many thanks to Paul Scheper for turning me on to this information.

1. Those living in their homes could reap a large windfall when the line of credit exceeds the home’s value.

2. The HECM is a non-recourse loan, never has to be paid back if you do not want to do so.

3. Even the affluent would have a safety net for unplanned expenses.

4. It could be used to improve regular cash flow and if you are so inclined, help your children along the way. My saying is that if you die at 90 and your children are 70, they will have little time to enjoy what you are leaving them.

5. Underfunded homeowners could use it as a last resort.

6. Could be used to buy other real estate. 

Are There Possible Problems With A Line Of Credit?

Of course, anything that seems too good to be true, probably is, but is it good enough to check with your investment advisor. Yes.Some people tell me that I have a hidden agenda on these loans. It is not hidden it is right out in the open. I believe in real estate and after much consideration and thought, I believe in an equity line of credit. When should someone check it out? When you turn 62? Remember you have another important decision that year, when should you take your Social Security. Start getting ready, those years come fast. I have celebrated my 62 birthday many moons ago and I feel like I just started Indiana University.

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