line of credit
There are a lot of confusing parts and details to Reverse mortgages because they are so different from a traditional loan but it’s difficult to know where one can find honest and reliable information about them.
I have written an article about this topic and following is the 4th. part of it.
If the Line-of-Credit HECM is used and a borrower is looking to have the funds in it increase over the years, they can take advantage of the Growth Feature which is included in the Line-of Credit program.
By choosing an initially higher interest rate at the start of the loan and if the borrower does not take a “Draw” (Or they take a small amount) at the close of Escrow, they will see the funds in their account increase over the following years.
These funds are not income, therefor not “taxable” and can be used to enhance any retirement savings or portfolio by avoiding any “drawdowns” on their investments and possibly avoiding “tax” consequences.
If it’s a situation of paying off an existing large mortgage and they want additional cash for monthly expenses, then using a lower interest rate might be their best solution or even using a Fixed Rate Reverse loan.
Maybe they don’t want to have to pay any costs for the new loan and in that event, they could do a” No Costs” Reverse loan, but at a slightly higher rate than if they opted to pay for the costs associated with choosing a lower interest rate.
And so, it goes.