Line of Credit (LOC) in Reverse Mortgage
In so many aspects Reverse Mortgage Line of Credit is like HELOC, but easier to get with less restrictions and more benefits.
As a homeowner, you made a smart decision a long time ago, and have worked hard over the years to take care of your property. If you are like most homeowners, you’ve likely built a significant amount of equity and wealth in your home over time. A reverse mortgage makes it possible for you to access the wealth you’ve grown (portion of your home equity), while staying in the home you love.
The most amazing feature of Reverse Mortgage is the Line of Credit. The LOC in reverse mortgage is especially useful for financial planning.
You are not alone. There are countless People looking to either supplement their retirement income or simply have assurance they have funds when they need them.
FREE CONSULTATION
The Points that draw many people to Line of Credit of Reverse Mortgage
Let us look at the most important advantages of LOC in reverse mortgage:
- IT IS OPEN-ENDED CREDIT: this means you can borrow from it, pay it down, and borrow from it again without restriction. In fact, many use the LOC as a cash flow management for either personal or business use.
- IT IS NOT TAXED WHEN IT IS DRAWN: Contrary to most retirement cash flows that are taxed, drawing funds from reverse mortgage LOC is not taxable. Strategic draws may permit homeowners to stay in a lower tax bracket and reduce their tax liability.
- IT IS QUITE SECURE: The LOC is not capped, reduced, frozen, or eliminated because of market conditions or property value declines. LOC could be perfect to use for long-term financial planning.
- IT GROWS! The most irresistible and interesting feature of reverse mortgage LOC is the capability of the fund to grow. Usually, it grows at the same compounding rate as the loan balance and grows when payments are made.
- FUNDS LEFT IN LOC DON’T ACCRUE INTEREST OR MORTGAGE INSURANCE. Drawing from LOC would naturally increase the loan balance, and only charge interest on what you borrowed.
- IT IS LIQUID HOME EQUITY. Regular home equity cannot be accessed so quickly. People usually sell their house or go through stringent requirements plus fees to get home equity line of credit. But with LOC access to your equity funds takes only a few days.
- LOC IS A PLEDGED FUNDS. The LOC is not considered an asset. These funds are “pledged” to the borrower. This means the growth is not taxable and the LOC cannot be willed or given away.
FREE CONSULTATION