The Sky is the Limit: How to Use Your HECM
The purchase of a home is a substantial financial investment. A reverse mortgage is federally mandated type of loan that could help you make use of the equity that you have built in your home. A reverse mortgage is designed to help people age 62 or older transfer this equity into cash funds or toward the purchase of a new home. At Texas Reverse Mortgage, Inc., our loan officers have more than a century of experience helping clients consider, apply for and receive reverse mortgages to supplement their income. We serve clients in Austin, Dallas, Fort Worth, San Antonio, Houston and all over Texas. We can help you determine if an HECM is right for you and understand ways to use a reverse mortgage to achieve your goals. Contact Texas Reverse Mortgage, Inc., today with any questions and to start the process today.
Defining an HECM Plan that Works for You
When you begin considering obtaining a reverse mortgage, also known as a home equity conversion mortgage (HECM), you will need to make a few decisions. You will consider ways to use a reverse mortgage and consider how you would like to be paid out to achieve your goals.
Possible Uses for Your Reverse Mortgage
There are a number of ways to use a reverse mortgage. Common ways our clients have used their HECM payouts include:
- To supplement social security payouts or other types of fixed income.
- To delay social security payouts, which
- To remodel a home to be more accessible or comfortable or for purely aesthetic purposes.
- To pay monthly expenses such as car payments.
- To pay for medical care or other live-in care.
- To purchase a new home without mortgage payments.
Payout Options for Your HECM
Once you have a plan for how you will use your HECM, you can better determine what type of payout is best for you. You can choose a lump sum, regular payments, a line of credit, or a combination of the three.
If you would prefer a lump sum payment, there are a few things to note. First, you will only be able to withdraw up to a certain amount allowable under a first-year cap. Typically, this is 60% of your HECM initial principal limit. If you choose a lump sum payout, you will automatically forfeit the other 40% of your principal limit. Lump sum payouts have a fixed interest rate.
Many of our clients find a monthly payout works well for their budget. There are fixed-term and tenure options when it comes to this type of HECM payout. The tenure HECM payout is available to you each month for as long as you (or your spouse) lives. The term payout option gives you a monthly payout for a predetermined period of time (usually at higher payments than a tenure option because it exists for a shorter period of time). Once your term reverse mortgage payout period is complete, you are still able to live in your home as long as you continue to pay property tax and other charges like insurance.
Line of Credit
If you would prefer to utilize your HECM funds at your leisure, a line of credit payout may be right for you. You are free to use as much of your principal payout as you light, as long as you don’t exceed your first year cap in the first year. You are only charged interest on the funds you withdraw, and your credit line grows over time as you retain your HECM.
Financial Flexibility for Your Future
If you are 62 or older in Austin, Dallas, Fort Worth, San Antonio or Houston, you may want to consider using a reverse mortgage. The team at Texas Reverse Mortgage, Inc., is dedicated to our clients. We are here to help you explore your options, consider how you might use your HECM and to guide you through the application process. Contact our team today to schedule an appointment.