Breaking Down HECM and Reverse Mortgage Myths
Susan A. Pomfret - USA Mortgage
For more information about the author, click to view their website: USA Mortgage
Mar 26, 2024
Florida - Southwest
Susan A. Pomfret RICP®️
There
are many misunderstandings about Home Equity Conversion Mortgages (HECMs).
Something everyone can agree on is that HECMs offer an avenue for older
homeowners to use a portion of the equity in their homes to supplement their
income in retirement.
You
may have heard some other things about HECMs that are misleading. Let’s
separate fact from fiction.
Myth
#1: I won’t own my home.
Fact: Just like a regular mortgage, you keep the title to your home. The lender’s interest in your property extends only to the balance of your HECM loan.
Myth
#2: I won’t have anything to leave my children.
Fact: The loan is not due until the last borrower dies, moves out, or sells the home. If you pass away, your heirs can either sell the home or refinance it. The HECM lender will receive the amount owed on the loan. In addition, you cannot borrow the full appraised value of your home, and home values have risen steadily in recent years. This creates two ways in which there may be equity for your heirs after the home is sold and the loan is repaid. Please note there is no guarantee that your home’s value will stay the same or increase.
Myth
#3: I can’t sell my home.
Fact: You can sell your home just as you would if you had a regular mortgage. The HECM will be paid off with the proceeds from the sale, and you will receive the remaining funds.
Myth
#4: I’ll have to pay taxes on the funds I receive from the loan.
Fact: Proceeds from a HECM are usually income tax-free, but you should always consult your tax advisor to make sure you understand any tax consequences.
Myth
#5: I have to pay off my current home loan before I can apply for a HECM.
Fact: The HECM will pay off your existing mortgage, and then the funds available to you will be based on the equity in your home and amount the program allows you to borrow.
Myth
#6: There are restrictions on the way I can use the funds from the loan.
Fact: You can use the proceeds from a HECM any way you wish. Your home may well be your greatest asset, and wise use of these funds can give you greater security in retirement.
Myth#7:
I should only consider a HECM as a last resort.
Fact: Rather than considering a HECM as a last-ditch effort to raise retirement funds, financial planners are making it part of comprehensive retirement planning. Uses for HECM funds include paying for long term care, improving cash flow, remodeling your home to allow aging in place, paying off higher interest consumer debt, and delaying the start of Social Security so the monthly benefit amount can grow.
If you have additional questions about HECMs or Reverse Mortgages, I'm here to help. Call me today for more information about this retirement income option. 401-595-7300.
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Local Services By This Author
Susan A. Pomfret RICP, USA Mortgage
Reverse MortgagesAt USA Mortgage, we are passionate about helping seniors achieve financial flexibility through Home Equity Conversion Mortgages (HECMs) and other Reverse Mortgage solutions. With a customer-focused approach and over two decades of experience, we provide tailored mortgage options designed to meet the needs of homeowners aged 55 and older.Our dedicated local Team are experts in HECMs/Reverse Mortgages, guiding you every step of the way with a seamless loan process. Whether youre looking to access your homes equity, refinance, or explore a HECM or Reverse for Purchase option, USA Mortgage offers a wide range of solutions to help you reach your financial goals.We pride ourselves on delivering a reliable, detail-oriented, and personalized experience. From the initial consultation toloan closing, our Team is committed to finding the right product that works for you, providing peace of mind and financial freedom. Trust USA Mortgage to be your premier home loan partner, empowering you to make the most of your retirement years.We offer a wide range of mortgage options to suit your specific needs and financial goals. From conventional loans to FHA, VA, and USDA loans, HECM and Reverse Mortgage loans. USA Mortgage has the expertise to help you find the perfect mortgage solution. Susan A. Pomfret, RICP has a career spanning several decades, she is proud to be one of the trailblazers in the reverse mortgage industry, having the honor of originating one of the first HECMs in Rhode Island in 1989 and has since dedicated her career to advancing the industry, playing a pivotal role in elevating companies to new heights. Under her leadership, she has transformed HECM closings, overseen vast teams, and engineered sales strategies nationwide.Susan's passion extends beyond just professional accomplishments; she is deeply committed to the senior community. This is reflected not only in leadership roles within senior-focused non-profit organizations but also in the dedication as a volunteer and advocate. She has been published in numerous mortgage publications, covered esteemed events like the White House Conference on Aging in 2005 and 2015, and was chosen to assist in writing the first Certified Reverse Mortgage Professional (CRMP) exam for the industry's trade organization, the National Reverse Mortgage Lenders Association (NRMLA).In addition to Susan professional endeavors, she holds a Bachelor Degree in Paralegal Studies, a Certificate in Gerontology from Roger Williams University and the Retirement Income Certified Professional Designation from The American College of Finance Services. Susan is driven by the mission to enrich the lives of our senior population and empower retirees to live a financially stress-free retirement.Contact Susan Pomfret, RICP at 401-595-7300 to schedule your free consultation.NMLS#1253876. Licensed in FL (License #LO125044)