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Benefits & Uses
Benefits & Uses
The more you understand the benefits and safeguards of a HECM, the more likely you can imagine how your life would change for the better. You deserve the opportunity to ask, What if…?
What can I use the money for?
The available options on how you can use the money are unlimited and unrestricted. Below is a small sampling of the many ways to enjoy your HECM Benefits:
- Eliminate your monthly mortgage payments
- Supplement your monthly income
- Improve or make home repairs
- Pay off credit card debts or other obligations
- Setup a line of credit for unexpected expenses
- Pay for medical expenses or supplemental insurance
- Travel or enjoy leisure activities
- Gifts to family
- Educational Expenses for Children or Grandchildren
- Charitable Giving
- Or Anything you wish.........
How will I receive the available Funds?
The HECM provides you with great flexibility in how you access your funds. You decide on the method that best suits your individual needs:
- Monthly Supplemental Income - you can receive a monthly distribution in the form of a check or direct deposit.
- Lump Sum – you can receive available funds all at once at the closing of your loan.
- Line of Credit – available funds can be set aside for you to draw upon when you need additional money. Plus, the unused portion of your Line of Credit continues to grow.
- Any combination of the above – added flexibility allows you to mix and match two or three of the above options.
What are the Costs?
The typical costs associated with a HECM are similar to other mortgage programs. HUD regulations set specific guidelines on allowable costs and require that they are explained in detail, discussed up-front and are made clear. Costs are typically broken down into 3 main categories:
- FHA Insurance – protects the terms of your loan.
- Origination – covers the cost of processing your loan, advisors, coordinators,processors, management support, overhead and compliance.
- 3rd Party Costs – Includes appraisal, title, escrow, flood certification, credit and signing agent. These costs are only incurred as directly billed by third parties without any markup.
Critics often point to HECM's as “high cost” loans, but they rarely explain their point of view. What they usually mean is that with traditional mortgages, you are often paying for low costs through higher interest rates.
Federally Insured HECM's generally have lower interest rates than traditional mortgages. Critics also suggest selling the home to downsize or move in with family as a preferred option. However, they rarely discuss the cost of selling, disruption to your life to relocate, loss of independence, leaving memories behind and giving up your home.
Before making the decision to proceed with a HECM, it is important to consider all available options. Your personal Senior Lending Advisor will assist you in understanding your options and provide you with the details you need to make an informed decision.
