The HELOC Blues

Many seniors today are singing the “HELOC BLUES” because of the tightening of credit by most banks. It was always more difficult for seniors to qualify for an equity line due to lower income and lack of credit history. However, today it’s even more difficult as all banks have tightened their lending guidelines for home equity lines of credit. The advantage of the HELOC is the low (or sometimes non-existent) closing costs. The disadvantage is that once the money is taken from their line of credit, the senior has to make payments on the loan.

The answer to the HELOC Blues is the Reverse Mortgage ! One of the ways to take out funds from a Reverse Mortgage is to take the money in the form of a credit line. Unlike a HELOC, the senior does not need a certain credit score or certain income to qualify. The senior only accumulates interest on the amount that they draw to use (remember there is never a payment on the Reverse Mortgage). The money that the senior is not using actually grows at an annual rate of approximately 4% (rates change without notice). This growth is TAX FREE !

According to AARP, this is the most popular way to take Reverse Mortgage funds. This gives the senior more control over when and how much of their equity they want to spend. The senior keeps the title to their house and the senior will keep any equity left after the loan is paid off. The loan is not due until the senior permanently vacates the property.
Talk to a Reverse Mortgage Specialist. This may be your new song to sing and it won't be the blues !

Brenda Wheeler, Reverse Mortgage Specialist, M & I Bank