At this point, she owes $81,000, which includes the money she drew from the line of credit for expenses and accrued interest. When she opened the reverse mortgage, she was eligible to borrow $370,000, most of which still sits unused in her line of credit. The unused credit balance - perhaps the money that will eventually go to monthly payments - in the line of credit grows at the same variable interest rate as the interest charged on any loan balance. Alternatively, you could set up monthly “tenure” payments of $2,130 from the line of credit for as long as you remain in the house, or monthly “term” payments for a fixed time (perhaps $2,780 for 20 years). That could sit in a line of credit until you need it. Assuming about $26,000 in upfront costs rolled into the mortgage, you would be eligible for roughly $420,000 in credit. Say you are 65 and your house is worth $1 million. You can get an idea of how much a HECM (pronounced HECK-um) will pay by using the calculator at, which is run by Wade Pfau, co-director of the American College Center for Retirement Income in King of Prussia, Pa. The size of the loan is based on your age, interest rate and the home value, up to an F.H.A. “Because of the fees, we generally say that if you don’t think you will be in the house for five years, a reverse mortgage may not be something you want to do,” said Shelley Giordano, an executive at Mutual of Omaha Mortgage who advises loan officers and financial planners on using home equity in retirement planning. Only the money actually pulled from the account is charged interest, and that is known as the loan balance. When you apply for a reverse mortgage, you’re required to take the maximum amount you are eligible for, but the money you do not use immediately - say, the untapped portion of a line of credit - sits in a special account earning interest. The loan and the interest on the money that was taken out come due when the last surviving borrower or eligible nonborrowing spouse dies, sells the house or leaves for more than 12 months, perhaps to enter an assisted living facility. With a reverse mortgage, homeowners 62 and older can borrow against the value of their home. Lemoine is also executive director of the Academy for Home Equity in Financial Planning, a group of financial and housing experts. “A younger retiree can stay in the house while turning equity into an income stream.” Dr. “The best use of this tool is to provide and supplement income during retirement,” said Craig Lemoine, the director of the financial planning program at the University of Illinois, Urbana-Champaign. Homeowners in their 60s and early 70s could use cash from a reverse mortgage to protect investment portfolios during market downturns, to delay claiming Social Security benefits or to pay large medical bills. Untapped money in the line of credit earns interest.
![no longer home no longer home](https://i.ytimg.com/vi/WA-7Fcqylhk/maxresdefault.jpg)
![no longer home no longer home](https://gamecritics.com/wp-content/uploads/2021/08/20210730164541_1.jpg)
Among her expenses: $50,000 on emergency dental work and a down payment to reserve a spot in a retirement community set to open in 2025. Fox began pulling money from her reverse mortgage. Within a year, her cash reserve was depleted, and Ms. Fox chose a line of credit, which she could tap as needed.
![no longer home no longer home](https://images.gog.com/27d4b2bd9ff2e322b4a38b661ae211a9efe0bce23170aaa0298b9a1d1bedbecf.jpg)
Reverse mortgage borrowers can take the money as a lump sum, as fixed monthly payments or as a line of credit. If something unexpected did happen, “it could be when the stock market is down and it could be an inopportune time to sell assets,” she said. Fox, 75, had set aside $150,000 in a cash reserve, and the reverse mortgage was another backup. For added protection, she took out a reverse mortgage on her new home.
![no longer home no longer home](https://img.itch.zone/aW1nLzEzNDQ0OTIucG5n/original/XZNEFF.png)
She waited two years to retire as a financial planner and three to sell their house and buy a lakeside townhome in Reston, Va. After her husband died suddenly from a fall in 2016, Marjorie Fox decided to hold off on any big decisions.