Ways to Use a HECM
The Home Equity Conversion Mortgage (HECM) is a versatile retirement funding tool that can be utilized in many ways. Here are just some of the ways to use a HECM:
- Buy the retirement home which suites your goals with half down and make no monthly mortgage payments on it. (*)
- Reduce your monthly expenses by paying off your forward mortgage sooner. (**)
- Re-model your home to accommodate aging limitations.
- Maintain a line of credit (that grows) for health emergencies and surprises.
- Cover monthly expenses and hold on to other assets while their value continues to grow.
- Cover monthly expenses and avoid selling assets at depressed values.
- Pay for health insurance during early retirement years until Medicare eligible at 65.
- Pay your Medicare Part B and Part D costs.
- Combine life tenure payments with Social Security and income generated by assets to replace your salary and maintain your monthly routine of paying bills from cash flow.
- Pay for your children’s or grandchildren’s college or professional education.
- Maintain a “standby” cash reserve to get you through the ups and downs of investment markets and give you more flexibility.
- Combine proceeds with sale of one home to buy a new home without a forward mortgage and monthly mortgage payments.
- Pay for long-term care needs.
- Fill the gap in a retirement plan caused by lower than expected returns on your assets.
- Pay for short term in-home care or physical therapy following an accident or medical episode.
- Pay for a retirement plan, estate plan or a will.
- Convert a room or basement to a living facility for an aging parent, relative or caregiver.
- Set up transportation arrangements for when you are no longer comfortable driving.
- Create a set aside to pay real estate taxes and property insurance.
- Delay collecting Social Security benefit until it maxes out at age 70 1/2.
- Eliminate credit card debt and avoid building new credit debt.
- Cover monthly expenses in between jobs or during career transition without utilizing other saved assets.
- Cover expenses and avoid capital gains tax consequences of selling off other assets.
- Purchase health-related technology that enables you to live in home alone.
- Pay for an Uber or Lyft account so you have mobility and access to appointments and social activities.
- Help your adult children through family emergencies.
Interested? Questions? Contact us to learn more.
* Borrowers are still responsible for property taxes, homeowner’s insurance, and complying with loan terms. ** Loan proceeds must first be used to pay off the existing mortgage.