A reverse mortgage credit line is an excellent option for those seniors who do not need all of the cash from their loan at one time. One thing to keep in mind is that the credit line option is only available with an adjustable interest rate—the fixed rate option is for those who want or need all of their funds from the start such as those who wish to use a reverse mortgage to pay off an existing mortgage and/or other loans with high balances. However, for those who do not want to draw against the entire loan balance a line of credit is the perfect solution.
With a HUD reverse mortgage line of credit not only does the borrower not pay interest on any unused funds but those unused funds increase in value. This additional growth is not interest as such but a growth index that is based on the interest on the loan itself. The unused funds in a reverse mortgage grow in value at the same rate as the accrual of interest on the loan plus an additional half of a percent. This means the available unused principal on the loan increases on a monthly basis giving the borrower more money with which to do as he feels necessary.
When you are looking at a reverse mortgage line of credit you want to remember the growth rate is for the borrower only. At the time a homeowner with a reverse mortgage line of credit dies only the remaining principal funds are available to his or her heirs. That means if a borrower has not withdrawn all of the money from his reverse mortgage before his death any remaining balance that consists of the growth margin will not be distributed to the heirs. This portion of the unused balance of the reverse mortgage is only available to the borrower.
In addition to its ability to grow in monetary value, the line of credit option also helps borrowers who only need cash on an occasional basis. For example a borrower may pay off his mortgage but needs funds to pay his annual taxes on the property or maybe take a vacation. The choices are abundant and will be different for each homeowner. Making the choice to use a reverse mortgage line of credit can certainly help the senior homeowner tap into the cash value of his home without paying interest on the entire loan amount. The money a borrower can save not only on interest but also using the growth factor can add substantially to the amount of cash a senior has to make his life easier.
The mortgage insurance for which you pay guarantee your money is always available for you to use. Even if the company goes out of business before you use all of your funds the money is still available. You never have to worry about your funds being frozen as many companies do if you have not withdrawn all the funds within a certain period of time.
A thirteen-year veteran of the mortgage industry, Robert Griffin specializes in reverse mortgages and has helped over 3000 Americans find financial security with a reverse mortgage. 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 more information, please call (866) 683-3690 or visit our Reverse Mortgage website.
Tags: Reverse Mortgage
