Banks and credit unions occupy a special place in helping their customers get prepared for retirement. Financial institutions also rely on the core deposit nature of older customers, who, not surprisingly, make up the overwhelming number of high balance depositors. However, a growing number of older customers are running low on savings and need a 4th leg to the income stool, in addition to social security, pensions and savings. Reverse mortgages, and especially the Home Equity Conversion Mortgage (“HECM”) product, can solve many problems for retirees, but specifically, for bank customers, can offer these unique solutions.
HECM Home Equity Annuity Product
Many retirees like annuities because they provide a consistent payout over a lifetime period or specific term. However, many retirees do not have the available cash. The HECM Tenure Product, which permits an annuity-like monthly payout that can last until the youngest borrower leaves the home or passes away is a perfect solution. With Lower Cost HECM options available, borrowers can access this HECM product with a low upfront cost. And unlike an annuity, the customer can change their election from the Tenure product to a line of credit at any time and take more money out in case of emergencies. And the best feature: the homeowner retains the equity appreciation of the home and if at termination there is equity left in the house, it belongs to the homeowners or their estate.
Repay an Amortizing HELOC
HELOCs do provide a backup financial resources for retirees. The issue is when the HELOC starts to amortize and no further draws may be made. At that point the borrower may not have sufficient income to qualify for a new HELOC. A HECM can help in these circumstances. Its proceeds and availability are guaranteed and the income requirements is a fraction of those normally required for a HELOC or for a Home Equity Loan.
Obtain a Growing Backup Line of Credit
An unused line of credit on a HECM loan grows every year at the same rate as the annual mortgage rate plus the annual mortgage insurance premium. Consequently, the available line could grow in excess of the home value, which with the non-recourse features of the HECM, can turn out to be very valuable. This growth can help fund future long term healthcare costs or other emergencies. With Lower Cost HECMs, the upfront costs to obtain this protection can be minimal
Would you like to learn more?
- Click here for eBrochures, eBooks, FAQs and Videos!
- If you would like to know how much you potentially qualify for, and whether you possibly have adequate monthly cash flow, go to the HECM WIZARD and input your information.
- If you would like to reach out and talk with me, fill out the information on Contact Me or email at st.john.bannon@JMCapGroup.com
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