A reverse mortgage is a lot like a HELOC. It can offer homeowners aged 55+ a valuable additional source of income but with no required monthly mortgage payments. Older homeowners are often reliant on limited savings and funds from Social Security. They may find their options for additional cash constrained. Fortunately, there’s a secure and dependable method to consider: a reverse mortgage Home Equity Line of Credit (HELOC).

Homeowners aged 55+ who have paid off a significant portion or all of their mortgage can utilize the equity built up in their homes by having a lender provide them with funds (hence the “reverse” concept). This can be structured as a line of credit to draw from as you wish, monthly payments to you or a lump sum. By tapping into this accrued home equity, seniors can effectively supplement their income, with repayment only required upon the sale of the home or their passing. If you were interested in a HELOC, a reverse mortgage may be a better option for you.

Presently, it might be an especially opportune moment to pursue a reverse mortgage HELOC. Here are three reasons why it may be worth considering right now:

High Borrowing Costs

Inflation has gradually cooled since reaching a 40-year peak in June 2022, but interest rates have remained elevated. Benchmark interest rates surged to their highest level in 22 years last summer and have stayed there since, resulting in increased borrowing expenses across the board, from mortgages to credit cards to personal loans. In such a climate, a reverse mortgage HELOC could be appealing for seniors seeking relief from high-interest debt, providing access to substantial equity to address existing financial obligations.

Delayed Relief

Despite initial optimism for interest rate reductions in 2024, hopes for relief have dwindled due to a series of disappointing inflation reports. February’s inflation figures, showing a rise to 3.2%, well above the Federal Reserve’s 2% target, suggest that interest rate cuts may not materialize in the near future. This delayed relief could require homeowners aged 55+ to explore alternative means of managing expenses, with a reverse mortgage HELOC offering a potential solution to their budget constraints.

Superior to Alternatives

For older homeowners in need of extra funds, it’s essential to evaluate all available options. Currently, many alternatives may not be as advantageous as a reverse mortgage HELOC. Credit card interest rates soar around 20%, while personal loan rates also remain in the double digits. Regular home equity loans and HELOCs can benefit certain homeowners, but the risk of losing one’s home due to required monthly mortgage payments is too risky for those in or considering retirement. In contrast, reverse mortgage HELOCs offer relatively lower rates without the risk of home loss due to required monthly mortgage payments. One great feature of reverse mortgage HELOCs is repayment is only required upon the sale of the property or the homeowner’s passing.

In these times of uncontrolled inflation with no end in sight, elevated borrowing costs, and less favorable financing options available, many retirees may find a reverse mortgage HELOC to be a viable means of boosting income and addressing high-interest debt. While eligibility hinges on age and the amount of home equity, exploring a reverse mortgage HELOC may be worthwhile for select homeowners in the current climate. Start by giving us a call today or filling out the form on this page for more information.