Your videos are excellent! I'm inn the process of getting a reverse mortgage. Every question I've had you have answered clearly and distinctly. Thank you. Now I sit on pins and needles waiting for the outcome.
Taryn, great videos. I've been studying reverse mortgages in great detail. I would pursue one, not for home-security (my phrase) but for retirement strategy, namely "sequence of returns" maximization. The "growth" on the line of credit is fascinating but apparently also poorly covered on the internet in general. I've only seen one other source that mentioned it and I think (not sure) they made it sound like one's line of credit grows but you're not actually earning money. 1) Is that correct? 2) Can you point me to any official sources of information that document it? 3) Are you saying that if my RM starts with a LOC of 200k, and I withdraw half... I pay the interest rate, say "X," on the 100k, but continue to accrue "X + 0.5%" on the remaining 100k? 4) At death/move-out, is the LOC cash remaining returned to me/my heirs? I think that ultimately I'd need to see some amortization examples to really feel like I "know what I"m buying." That last level of detailed certainty is really hard with RMs even though I'm totally a believer thus far. Thanks very much.
Hi Jack! Very much appreciate the comment! It is correct that the line of credit is not "earning" money. It is simply a growth of the credit line itself. Equivalent to a credit card company increasing your credit limit. So, even though the money is growing at that certain percent each year, if you were to withdraw that growth, it would still become part of the balance that would need to be repaid at the end of the loan. If it were earning money or earning interest, that would not be the case. As far as official sources that go over this, you may want to check HUD's website and explore their content for that. Here is the link to the reverse mortgage portion of the site. www.hud.gov/program_offices/housing/sfh/hecm/hecmhome . For the third question, yes, any amounts that are withdrawn from the credit line begin to get charged interest, but any amounts left in the credit line do not get charged interest because you have not used it yet. This is similar to how a HELOC works, if you are familiar with that. As well, the money that is left in the line of credit will grow at the same rate that your loan balance is charged for interest + .5% for the mortgage insurance. Lastly, regarding the line of credit after death, you can think of the credit line as your liquidated home equity that you haven't used. So, if when you pass away, there is still money in there, that money will simply stay in the equity in your home and will not be part of the balance that is owed. In this manner, your heirs will recoup that when they sell the home, as they don't have to pay back what was left in your credit line. I hope all of that makes sense. I know it can get fairly complicated once we start delving into these types of specifics. If you have any further questions, please feel free to give me a call anytime. (888) 982-0475.
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Your videos are excellent! I'm inn the process of getting a reverse mortgage. Every question I've had you have answered clearly and distinctly. Thank you. Now I sit on pins and needles waiting for the outcome.
My pleasure Tina! So happy the videos have helped. Thank you for the comment! Good luck with your transaction. 😊
Taryn, great videos. I've been studying reverse mortgages in great detail. I would pursue one, not for home-security (my phrase) but for retirement strategy, namely "sequence of returns" maximization. The "growth" on the line of credit is fascinating but apparently also poorly covered on the internet in general. I've only seen one other source that mentioned it and I think (not sure) they made it sound like one's line of credit grows but you're not actually earning money. 1) Is that correct? 2) Can you point me to any official sources of information that document it? 3) Are you saying that if my RM starts with a LOC of 200k, and I withdraw half... I pay the interest rate, say "X," on the 100k, but continue to accrue "X + 0.5%" on the remaining 100k? 4) At death/move-out, is the LOC cash remaining returned to me/my heirs? I think that ultimately I'd need to see some amortization examples to really feel like I "know what I"m buying." That last level of detailed certainty is really hard with RMs even though I'm totally a believer thus far. Thanks very much.
Hi Jack! Very much appreciate the comment! It is correct that the line of credit is not "earning" money. It is simply a growth of the credit line itself. Equivalent to a credit card company increasing your credit limit. So, even though the money is growing at that certain percent each year, if you were to withdraw that growth, it would still become part of the balance that would need to be repaid at the end of the loan. If it were earning money or earning interest, that would not be the case. As far as official sources that go over this, you may want to check HUD's website and explore their content for that. Here is the link to the reverse mortgage portion of the site. www.hud.gov/program_offices/housing/sfh/hecm/hecmhome . For the third question, yes, any amounts that are withdrawn from the credit line begin to get charged interest, but any amounts left in the credit line do not get charged interest because you have not used it yet. This is similar to how a HELOC works, if you are familiar with that. As well, the money that is left in the line of credit will grow at the same rate that your loan balance is charged for interest + .5% for the mortgage insurance. Lastly, regarding the line of credit after death, you can think of the credit line as your liquidated home equity that you haven't used. So, if when you pass away, there is still money in there, that money will simply stay in the equity in your home and will not be part of the balance that is owed. In this manner, your heirs will recoup that when they sell the home, as they don't have to pay back what was left in your credit line. I hope all of that makes sense. I know it can get fairly complicated once we start delving into these types of specifics. If you have any further questions, please feel free to give me a call anytime. (888) 982-0475.
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Do these rules apply to California?
Hi Brenda. Yes they do.