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Is a HECM Right for You?
Is a HECM Right For You?
There are 4 important steps to deciding if a HECM is the right step for you:
1. Get educated about the program and how you can benefit.
Your Senior Lending Advisor is dedicated to the Federally Insured HECM Program. They have the knowledge, experience and training to explain the program and demonstrate how it could positively impact your life. They are committed to providing the information and answers in a straightforward, caring manner and making sure you understand how the program works.
2. Compare the HECM to Alternative Options.
To fully understand the potential benefits of a HECM, it is important to compare it to available alternatives. These include:
- Refinance to a traditional mortgage or Line of Credit – Depending on your situation, these programs may provide access to your equity. Of course, these do require credit and income qualifying, have a set loan term and require regular monthly payments.
- Sell your home – relocating options include: downsizing, moving in with family members, or retirement communities. The key decision is whether you want to give up your home and current lifestyle and environment.
- Do nothing – it is always an option to keep your status quo, but will your situation improve without a positive change?
- Support from family – children or other family members may have resources available to assist you, although this could present additional burden to them and impact your independence.
3. Define your situation and needs
You need to determine what would change and how you could improve your life if you were able to improve your financial situation. Key considerations are:
- Current financial situation – it is important that you understand the impact a HECM will have on your monthly cash flow and new opportunities created with an improved financial picture.
- How long do you plan to stay in your home? – If you think you will be in the home less than 2 years, a HECM may not be right for you. However, if your plans are to stay in your home longer, then the HECM may provide the security and financial independence you deserve and are looking forward to.
- Children/Heirs – although your heirs cannot be personally liable for resolving the HECM, when the home is passed on the HECM will have to be paid off by either paying off the mortgage, refinancing, or selling the property. You should know and consider their intentions for the home when it passes to them.
4. Decide who you want to involve in the discussion
Do you have any family members or other advisors that you want to participate in this decision making process? We encourage prospective clients to involve any advisors early in the process so they can be educated about the product along with you. Many well-intentioned advisors, including financial advisors and accountants, may not fully understand the HECM product and their advise may be limited by misinformation or lack of knowledge. Our goal is to work with your advisors and family members to ensure you have the best solution for your individual situation.
