For clients who have most of their net worth tied up in their homes, finding a way to use that equity to pay bills is a must.
If you are feeling your retirement income is too tight and you meet the eligibility requirements, using your home equity through a home equity conversion mortgage may be worth investigating.
Net worth and your mortgage.
Here are some reverse mortgage basics:
- Reverse mortgages are also known as home equity conversion mortgages (HECM) and are administered by the FHA.
- You enter an arrangement with the lender to take money out of your home based on the amount of equity you have and your age.
- You don’t have to have earned income to qualify.
- You keep the ownership of your house until the last occupant dies or moves out.
- You can receive the income from home equity in a variety of ways: For a specific time period, as a credit line to use as needed, or for your lifetime or the time that you or your spouse occupy the home.
- When you pass away or move from the home, whatever equity is left after the debt and fees are paid will pass back to you (if living) or to your estate. (For related reading, see: How Does a Reverse Mortgage Work?)