If your financial life now is perfect, then in my opinion you don’t need a reverse mortgage at all. But if you are in the same boat as many of us, and If you haven't set up your HECM line of credit now, a couple of years from now you may not be able to obtain a line of credit for an amount you are anticipating. Hence, better to have it now rather than at the eleventh hour, when you need it. Let that expected level of funding source be available and sit there, so you can tap into that cash when a need arises.
As you can see around us, and as you read and hear from in the news about this terrible financial situation we are experiencing, nobody knows what is going to happen three months from now. Even so our home prices are not that bad right now. Interest rate at this point is not that bad either. You will be better off to take the reverse mortgage now since the home values have not dropped dramatically yet. I am not a financial guru but, If I were you I would take that HECM and create a HECM line of credit. Let it sit there until you need cash. It could be for your daughter's wedding or grandchild's college education. You will have that line of credit waiting for you to call for.
Your house may be valued now at 1M. But the market from 2 years from now may easily be worsened so you probably won't be able to get a reverse mortgage cash at an amount you anticipated, because your home value went down, as a result your home equity got reduced.
Like many of our family members, friends and others in our neighborhood, most of us have mortgages on our houses, and all are making monthly payments. Everybody has that monthly payment but rather than doing that way switch to HECM and create a line of credit and continue paying towards reverse mortgage. The payments we make go against our reverse mortgage and will improve the available balance in that line of credit. And you can use that money when needed, for whatever you wish.
This FHA backed HECM loan is available for those who are 62 and over, like a retirement fund. Once you reach the age of 62, it is more beneficial for you to have a reverse mortgage rather than having ordinary mortgage payment. In the case of reverse mortgage- it's better to have it now than not able to do it or get a reduced amount than that you expected. Set that HECM line of credit now, only after you consulted with your financial and tax professionals.
Thank you.
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