Reverse Mortgage Line of Credit

A reliable reverse mortgage option for seniors is the HECM with a line of credit attached to it that grows over time. The HECM is a popular choice due to the growth of the line of credit. The rate at which the credit line grows is equal to the current interest rate being charged on the loan plus 0.5%. The cash received from a HECM loan can be used for any purpose, which is not the case for all reverse mortgages. Cash can be received in one of three ways, including in a single lump sum, as a monthly payment made to you over a specified amount of time as long as you live in the home, or a line of credit for a specific amount. Using the last method, the borrower can decide when and how much money to withdraw. The line of credit grows over time.

With FHA Home Equity Conversion Mortgage (HECM), the loan amount is based upon the age of the homeowner and the value of the home. HUD regulates the amount of each individual loan and they limit the maximum amounts allowed according to the area of the country. With a HECM, the government guarantees that the mortgage broker meets its' obligations. The credit line option allows borrowers a lot of freedom when planning their finances. They can take as much as they want of the loan funds, at the time that they want them.

This HECM option is only available in an adjustable rate mortgage, because in a fixed mortgage rate, the funds are only offered in a lump sum at the beginning of the loan. Fixed-rate is a great option if the homeowner needs all the funds at once, such as to pay off an existing mortgage or for a particular home repair, but not if they want to be able to access the funds over time. The credit line gives the borrowers the option of taking as much money as they wish at initial funding, and the remaining funds as needed.

A bonus to the line of credit option is that the funds do not accrue interest when they are not being used, so borrowers who do not have an immediate need for funds will not be penalized. Also, the HECM line of credit cannot be frozen if there is money available because the borrower will have already paid their federal mortgage insurance.

There is an increased HUD insurance for the higher loan amount for benefits received from the HECM, but this slight difference is minimal compared to the benefit of having a stable and dependable line of credit.

A thirteen-year veteran of the mortgage industry, Robert Griffin specializes in reverse mortgages and has earned the accolade of No. 1 reverse mortgage broker in the Southwest for three years in a row. The owner of Griffin Financial Mortgage LLC, based in Fort Worth, Texas, his memberships include the National Association of Mortgage Brokers (NAMB), the Mortgage Bankers Association (MBA), the National Reverse Mortgage Lenders Association (NMRLA) and the Better Business Bureau (BBB). Robert Griffin is also co-author of "62 Senior Moments." If you would like an information packet or would like to set up an appointment with one of our Reverse Mortgage Specialists, Please call (866) 683-3690 or view our online Reverse Mortgage Information.