Self-employed homeowners use Jumbo reverse mortgage credit line to enhance retirement options

Mortgage broker:

John Holmgren, Finance of America Mortgage

Property type:

Single-family home in Point Richmond.

$1.072 million.

Property value:

Loan:

HomeSafe Jumbo reverse mortgage credit line; Libor plus 4.875%; line amount $625,000

These homeowners, ages 75 and 81, had a business that they had operated for many years and also owned several rental properties. While their cash flow from their business and rental income was comfortable, they

Backstory:

had reached the point where they wanted to phase out of working. Without employment income, it was going to be difficult for them to live a comfortable retirement lifestyle, especially since they still had a mortgage payment. We evaluated FHA HECM as well as HomeSafe “Jumbo” reverse options and found that while the HomeSafe products had higher rates than the FHA options, they came with much lower costs and access to more funds. Because the homeowners were unsure of how much money they would need, or when it would be needed, they elected to go with the HomeSafe Select credit line. Unlike the fixed rate option, the Select does not require a distribution of funds at closing (except for the amount needed to pay off any existing mortgages) and unused funds in the line do not accrue interest.

Like traditional home equity lines of credit, HomeSafe Select credit lines must be renewed after 10 years, but unlike HELOCs they can never be canceled/suspended by the lender (as long as the home remains the primary residence and property taxes and home insurance are paid), providing extra security that the line will always be there to cover needs as they arise. These homeowners now have a substantial line of credit and no more mortgage payment, allowing them to live a more comfortable retirement.

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