Bringing HECMs Forward

Help your customers realize the full value of their home

Homeowners age 62+ hold $8 trillion dollars in home equity. And with longer lifespans and increased medical costs, demand has never been greater among this growing population (11,000 Americans turn 62 each day) for resources to fund their retirement. See how HECM lending is a safe way to help your borrowers attain their retirement dreams.


Modeling Reverse Mortgages


Walk through the four most common reverse mortgage lending scenarios with ReverseVision experts Wendy Peel and Carissa Orozco 
 

Meet the Smith's

Scenario: Replace forward mortgage with HECM

Meet Helen Johnson

Scenario: HECM for purchase

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This example will show what happens if the Smiths make the exact same payment on a HECM as they would have been making on their traditional forward mortgage.

How would the Smiths financial options change if they replace their traditional mortgage and HELOC with a HECM while continuing to make the same payment on the HECM?

  1. Home value: $500,000
  2. Payoff 1st Mortgage: $125,000
    10 more years @ 4.125%
    Payment = $1,273.00
  3. HELOC balance - $55,000 used of $75,000
    10 more years @7%
    Payment = $638.60
  4. Youngest borrower: 62
  5. Monthly Total = $1,911.60
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This example shows what happens if Helen chooses to use a HECM to purchase her new home, where she can remain payment free and enjoy a nicer home near her family.

Helen is a single woman and wants to move closer to her children and grandchildren. Unfortunately, she believes she cannot afford the nicer home she wants.

  1. Profit from Sold Home:  $400,000
  2. New Home Purchase Price: $600,000
  3. Minimum Down payment of New Home: $248,000
  4. Borrower Age:  68
  5. Monthly Mortgage Payment = $0

Meet the Jones's

Scenario: Refinance with a HECM LOC

Meet Jim and Kathy

Scenario: Sequence of returns

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This example shows how a HECM can improve their cash flow and supplement their savings. They will remove their monthly mortgage payment and receive a substantial line of credit that can be used whenever they need extra funds.

The Jones's have some retirement savings, but they are unsure if their funds will last. They have friends who’ve leveraged equity for peace of mind and want to learn more.

  1. Home Value: $400,000
  2. Payoff: $100,000
  3. Youngest Borrower Age: 75
  4. Available Line of Credit today: $121,200
  5. Available Line of Credit in 10 years: $175,450
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This example shows how a HECM can extend the longevity of their retirement portfolio by sourcing funds from a HECM Line of Credit (LOC) during times of market volatility. Their financial planner can validate this as an effective strategy for managing sequence of returns risk.

They are secure in retirement and claim they do not “need” a reverse mortgage. However, an inconsistent market has them questioning do they have enough funds to last their life span.

  1. Home Value: $800,000
  2. Payoff: $250,000
  3. Youngest Borrower Age: 65
  4. Probability of portfolio surviving to age 95 without a HECM ($1500/mo draw): 0.8%
  5. Probability of portfolio surviving to age 95 with a HECM ($1500/mo draw) : 100%

Talk with a Reverse Specialist

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