Pay Off An Existing Mortgage and free up the current payment as Tax Free Income:
- A HECM does not require monthly mortgage payments. Borrower must occupy the home as their primary residence and remain current on property taxes, homeowners insurance, any HOA Fees, and the costs of normal home maintenance.
- With the savings from your current mortgage payment you could cover other monthly expenses and avoid selling assets at depressed values.
- You can even create a Set Aside Escrow type account to pay future RE Taxes and Homeowners Insurance thus eliminating those expenses as well thus freeing up even more monthly Tax Free Cash Flow.
Stand-By Credit Line – “LOC” - Ask about the incredible “Growth Factor” feature!
- Use your proceeds available to set up the LOC now, but not use thus not accrue interest on until needed but the amount of the LOC grows with time for any unused portion. But by doing now, use the current market value of your home and current rates and never worry about qualifying in the future!
- Delay taking Social Security payments until the Maximized Benefit age.
- Use as a retirement strategy where the homeowner uses the credit line as a bucket to draw from during bear markets to maintain their Sequence of Returns thus filling the gap in a retirement plan caused by lower than expected returns on your assets periodically. This way you won’t have to “sell” assets at low values to maintain your current retirement plan budget thus allowing those assets to bounce back in value later.
- Short Term, or Long Term, Health Care Protection to be able to comfortably “Age in Place” and tap as needed for surprise short term medical needs such as in home therapy or long term needs such as buying a specified plan you choose.
- Other Medical Expenses such as covering Medicare part B and D costs.
- Emergency Back-Up, to be used only/when needed, but able to tap quickly and easily. Life’s Surprises such as Health Care, Repairs/Maintenance for Home and Car(s), Storm Surprises, Inflation hits to Budgets, Help Family Members etc.
Tenure Payments Proceeds Option:
- Tax-free “Lifetime” income stream, thereby reducing the need to make withdrawals from tax portfolios just to supplement your monthly income. Guaranteed to last as long as you remain in the home as per standard guidelines. (“Tax-Free”: Please consult a tax specialist)
Term Payments Proceeds Option:
- Tax-Free income payments for a set period of time for a specific retirement goal or financial need. You pick the amount and length of payments from your available proceeds.
Other GREAT uses of the Proceeds from your HECM funds available:
- Pay legal fees to prudently set up and protect your estate and wishes.
- Remodel or Update your current home with handicap accessories to accommodate aging in place instead of moving or to help you move in an aging parent to care for.
- Mobility - Pay for basic needs help such as transportation (Uber/Lift/Assistant) to shopping, doctors’ visits etc. without the higher costs of a vehicle, insurance, and auto maintenance or your inability to drive safely on your own. No Worries!
- Have fun! Buy a new RV, take a dream vacation and enjoy your retirement.
- Help out family members NOW and enjoy watching the fruits of your gifts while alive. (Private Schools, College/Trade School, Home Purchase, Staring their Family, Auto’s Etc.)
Divorce Settlement
- Use the HECM to buy out a spouse’s portion of the home without selling or withdrawing funds from your portfolio or retirement. And ex-spouse can possible even use their funds/settlement to fund a HECM purchase of their next home for less cash out of pocket!
Purchase your “Forever Home” using the HECM For Purchase choice (H4P)
- Use the HECM to purchase a new home (“right-size”), and invest the cash savings difference at your discretion and still have no monthly mortgage payments (see our section on “Buying in Reverse” for more details)