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Advantages to Your Clients



       1.     Planning for Retirement A HECM loan
              can be a wonderful tool for retirement
              planning. Loan proceeds can be used in a                                                                      Home Equity
              variety of strategic ways to supplement
              other income sources, and even delay                                                                          Conversion
              drawing from social security or portfolios
              during down markets which can have                                                                            Mortgage
              devastating effects.
                                                                                                                            Loan Basics
       2.     Limited Financial Resources and
              Options The homeowner can use a
              HECM loan to eliminate monthly mortgage
              payments that are hard to manage on a
              limited income. 2

              An Alternative to a Home Equity Line
       3.     of Credit (HELOC) The homeowner
              may need access to funds for a large
              expense or home improvements. As an
              alternative to a HELOC, a HECM loan can
              provide access to funds and eliminate       1 Consult your tax advisor.
              their monthly mortgage payments.            2 insurance and home maintenance costs.
                                                          Borrower must continue to pay property taxes, homeowners
              Borrower must continue to pay property      3 “Home-The Best place for Health Care”- The Joint Commission.2011.
              taxes, homeowners insurance and home        Web.22 Jan 2016. http://www.johnahartford.org/images/uploads/
              maintenance costs.                          resources/Home_Care_position_paper_4_5_111.pdf
                                                          These materials are not from HUD or FHA and were not approved by
              Purchasing a Home The homeowner
       4.     would like to move or buy a home that’s     HUD or a government agency.
              more appropriate for retirement and they    A reverse mortgage increases the principal mortgage loan amount
                                                          and decreases home equity (it is a negative amortization loan).
              may be concerned about qualifying for a
              traditional mortgage on a fixed income.     Reverse mortgage loan terms include occupying the home as
                                                          your primary residence, maintaining the home, paying property
                                                          taxes and homeowners insurance. Although these costs may be
       5.     Pay for In-Home Care The homeowner          substantial, the lender does not establish an escrow account for
              may need access to funds to supplement
                                                          these payments. However, a set-aside account can be set up for
              their health insurance. According to The    taxes and insurance, and in some cases may be required. Not all
                                                          interest on a reverse mortgage is tax-deductible and to the
              Joint Commission, not only can care be      extent that it is, such deduction is not available until the loan is
              provided less expensively in the home,      partially or fully repaid.
              evidence suggests that home care is a       The lender charges an origination fee, mortgage insurance
              key step toward achieving optimal health    premium (where required by HUD), closing costs and servicing   Information for Financial
              outcomes for many patients.³ A HECM         fees, rolled into the balance of the loan. The lender charges   Advisors and CPAs
              loan can be used to fund these in-home      interest on the balance, which grows over time. When the last
                                                          borrower or eligible non-borrowing spouse dies, sells the home,
              care needs.                                 permanently moves out, or fails to comply with the loan terms, the
                                                          loan becomes due and payable (and the property may become
                                                          subject to foreclosure). When this happens, some or all of the
                                                          equity in the property no longer belongs to the borrowers, who   For industry professionals only -
                                                          may need to sell the home or otherwise repay the loan balance.  not intended for distribution to the general public.
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