Can I get a line of credit without having monthly payments?

The short answer is Yes.

 

Using the HomeSafe^® Select, a proprietary refinancing tool from Finance of America Reverse LLC (FAR), borrowers are able to secure a line of credit without the burden of monthly mortgage payments. People who are considering a home equity line of credit (HELOC) will find that this may be a better alternative.

 

As with a HELOC, the HomeSafe Select solution has the advantage over a regular loan because it doesn’t have to be used for a specific purchase and no interest is charged to the unused amount. You could use the free cash for home remodels, pay for a vacation of a lifetime, pay for medical bills, or start a small business. The choice is yours.

 

However, a HELOC typically requires monthly payments with a balloon payment after 10 years. These can be risky and end up costing a good deal if they aren’t handled correctly. If you fail to make repayments on schedule it can lead to big financial problems.

 

The HomeSafe Select tool removes this risk by leveraging your home equity to establish a line of credit. HomeSafe Select is also an open-ended tool that allows re-draw of prepaid funds.

 

As with all HomeSafe tools, the HomeSafe Select provides loan amounts up to $4 million with a draw period of 10 years. The draw period comes with the protection of not being called due until the end of the maturity date.

 

To help illustrate how you could benefit from the HomeSafe Select tool, here is an example scenario where the LOC borrower is looking to have cash on hand to start a small business.

 

HomeSafe Select line of credit scenario**

Mr. Smith is starting a small business in retirement and he is concerned about how to pay for start-up and operating costs while he gets the business off the ground. As part of Mr. Smith’s retirement plan using home equity, he has a principal limit of $578,400 and still needs to pay off his existing mortgage of $250,000.00.

 

Using the HomeSafe Select financing tool, Mr. Smith secured a line of credit of $262,394.95 (this illustration assuming a 5.849% interest rate). This HomeSafe Select tool allowed Mr. Smith to pay off his existing mortgage while providing a line of credit to fund his small business. Provide a secured line of credit without having to worry about monthly payments gave Mr. Smith the peace of mind needed to focus on his new business while staying in his home throughout retirement.

 

As Finance of America Reverse LLC (FAR) continues to innovate in the proprietary reverse mortgage market, it becomes increasingly important to meet the needs of our customers with various rate and pricing solutions.  As a result, FAR introduced a premier suite of financial tools, called HomeSafe, that empower our customers with personalized plans to meet their retirement financing needs.

 

The HomeSafe^® financial tools are non-recourse loan and the borrower or their heirs have no personal liability for repayment of the loan. There are no prepayment penalties.

 

Reverse mortgages, with their built-in consumer safeguards and flexible options for accessing equity, are transforming the way people approach retirement. With any financial decision, it is important to carefully consider your options. The right financial advisor can guide you to a great decision that works with your financial goals. To speak with an expert, call a Licensed Loan Officer at 855.615.0365.

 

* It should be noted that this example is for educational purposes only. With any reverse mortgage, the borrower must meet all loan obligations, including living on the property a principal residence and paying property charges, including property taxes, fees, and hazard insurance. In addition, the borrower must also maintain the home. If the homeowner does not meet these loan obligations, the loan will need to be repaid.  Homesafe SELECT not available in all states.

 

This example assumes a loan with a principal limit of $578,400, and a variable-rate initial APR of 5.849%, changing quarterly up to a maximum APR of 8.85%.    Loan origination fee of $8,000, and remaining loan fees of approximately $4,395.  Monthly loan servicing fee of $30.  Terms may vary and conditions apply.

 

Oregon Only:·When the loan is due and payable, some or all of the equity in the property that is the subject of the reverse mortgage no longer belongs to borrowers, who may need to sell the home or otherwise repay the loan with interest from other proceeds. FAR may charge an origination fee, mortgage insurance premium, closing costs and servicing fees (added to the balance of the loan).·The balance of the loan grows over time and FAR charges interest on the balance.· Borrowers are responsible for paying property taxes, homeowner’s insurance, maintenance, and related taxes (which may be substantial). We do not establish an escrow account for disbursements of these payments. A set-aside account can be set up to pay taxes and insurance and may be required in some cases. Borrowers must occupy home as their primary residence and pay for ongoing maintenance; otherwise the loan becomes due and payable. The loan also becomes due and payable (and the property may be subject to a tax lien, other encumbrance, or foreclosure) when the last borrower, or eligible non-borrowing surviving spouse, dies, sells the home, permanently moves out, defaults on taxes, insurance payments, or maintenance, or does not otherwise comply with the loan terms. Interest is not tax-deductible until the loan is partially or fully repaid.

 

©2019 Finance of America Reverse LLC is licensed in 50 states and D.C. | Equal Housing Opportunity | NMLS ID # 2285 | www.nmls.consumeraccess.org | 8023 East 63rd Place, Suite 700 | Tulsa, OK 74133 CNot all products and options are available in all states | Terms subject to change without notice | AZ Mortgage Banker License #0921300 | Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act | Georgia Residential Mortgage Licensee | Illinois Residential Mortgage Licensee | Kansas Licensed Mortgage Company | MA Lender/Broker #MC2855 | Licensed by the Mississippi Department of Banking and Consumer Finance | Licensed by the New Hampshire Banking Department | Licensed by the N.J. Department of Banking and Insurance | Licensed Mortgage Banker — NYS Banking Department where Finance of America Reverse is known as FAReverse LLC in lieu of true name Finance of America Reverse LLC | Rhode Island Licensed Lender | HUD HECMS REQUIRE PAYMENT OF INITIAL AND PERIODIC MORTGAGE INSURANCE PREMIUM.

 

This article is intended for general informational and educational purposes only, and should not be construed as financial or tax advice. For more information about whether a reverse mortgage may be right for you, you should consult an independent financial advisor. For tax advice, please consult a tax professional.