That’s a great question! Once you have used all the funds available in your line of credit on a HECM reverse mortgage you can no longer take advances. However, as far as repayment or any additional obligations, there are none. You continue to own your home, live in it, maintain it, and pay your taxes and insurance.
There are some major differences between a reverse mortgage line of credit (or HECM LOC) and a traditional home equity line of credit (HELOC). Both are offered as variable rate loans, which means the interest rate rises and falls monthly along with the “index” described in your loan agreement. Here are some of the major differences:
- In a traditional line of credit, the bank may freeze or lower your credit limit based upon changing home value or creditworthiness. With a reverse mortgage line of credit, the funds are available regardless of your home’s current value or your current credit situation. Once you have a reverse mortgage line of credit, it’s there.
- Traditional Lines of Credit give often give you “checks” to write for advances. Very easy and quick. In a HECM HELOC, you must request the funds in writing (fax is okay), which is a little more cumbersome than just writing a check. However, when you request an advance of funds the lender has 5 days to get it to you once they receive your request or they owe you a late charge! I always love pointing that clause out to my clients when they are signing their loan documents.
- Traditional HELOC’s require montly payments from the borrower of at least interest. HECM LOC’s do not require monthly payments.
- Traditional HELOC’s must be repaid upon expiration of the loan term, usually 10 to 15 years. HECM LOC’s do not have to be repaid until the last remaining borrower permanently leaves the home.
HECM Line of Credit option is my personal favorite of the options for taking funds in a reverse mortgage! It is so flexible, giving the homeowner the most control over how they choose to use their equity.
Bend, Oregon: CE Credits for Realtors delivered in Oregon on the topic of Reverse Mortgage
Sharon Falvey, Vice President Northwest Sales has been effectively delivering Continuing Education Credits to Realtors accross the State of Oregon and most recently in Bend, Oregon. This class has been very well received by Realtors that thought they understood the truth about Reverse Mortgage until they took the class.
Sharon Falvey and Security One Lending were recently quoted in "Reverse Mortgage Daily" and "Reverse Fortunes" as well as other's. It brings me great joy to be able to dispel the myths about Reverse Mortgage and show Realtors how they can position themselves to use it correctly and increase their sales. We all need to make our way in these interesting times and you can never have to many tools in your belt to do so.
Dan Heater: Continuing Education Director in Bend Oregon for COAR is quoted as saying:
"Thank you Sharon so much for the great class on Reverse Mortgages you did at COAR last week. The class was very good. It is amazing that we all still have these pre-conceived ideas about what a reverse mortgage is and how it can fit into our lives as we age. All of our brokers we very impressed with the class and had all changed their minds as to the value and use of reverse mortgages both personally, and as a tool to help their customers.
The class was concise, easy to understand and gave all who attended something else to include in their presentations for their clients. I would recommend this class for anyone to take. Anyone approaching this age, with parents close to this age, or a real estate practitioner with clients of this age would gain valuable information as to how to own real estate as you approach your senior years.
And Desiree Streeter, Broker in Bend Oregon as saying:
I want to thank you so much for drawing my card for the nice briefcase. That really brightened my day! I have had some really rough times lately with caring for my mother who has been ill for the past 2 years and then my husband being in the hospital since Feb 2 and getting out tomorrow. With that and work I have definitely had a full plate!
I really enjoyed the class today. I went into it knowing nothing at all about Reverse Mortgages. It was very interesting and I gained a lot of knowledge which I will use. I will highly recommend this class to others I know when I see it posted again. I look forward to your updates!
Real Estate Broker
If you would like more informaiton as to how I can bring this to your Association or Office please do not hesitate to contact me. For more general information please visit my website or call me direct at 541-891-5706 (cell) 503-534-3546 (office). I look forward to serving your needs.
Vice President, Northwest Sales
Home Equity Specialist
My blog is a personal expression of my own thoughts, and opinions and does not necessarily reflect the thoughts and opinions of Security One Lending