Seniors turn to reverse mortgages as a cash lifeline during the coronavirus crisis investinyou (In partnership with acorns.)
Another option is an annuity, which provides regular monthly while you remain in the home. There is an actuarial formula for how much money you can receive based largely on your age. Finally, there is the line of credit, which is the option that reverse mortgage advocates like Salter and Hopkins like the most. The line of credit earns interest until you tap it, so it could potentially grow to an even more sizable pot of money.
The HECM program has addressed these concerns by instituting some changes. Now borrowers are only able to access up to 60% of their loan value in the first year. In addition, lenders also conduct a financial assessment of borrowers to make sure they have the financial wherewithal to pay the expenses associated with a home. And borrowers must also go through — and pay for — counseling with a government-approved counselor.
What's more, reverse mortgage lines of credit can be accessed when other funding sources dry up. For example, JPMorgan Chase temporarily suspended its home equity line of credit program in mid-April due to surging demand.Though reverse mortgages have gained acceptance for use as a retirement income management tool, advisors still maintain that they are only appropriate in certain circumstances.made changes to the HECM program, making the line of credit less attractive.
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