HuffPost: 5 Reasons To Get A Reverse Mortgage

Home equity loans are “a product of the past,” writes The Huffington Post in a recent article, which urges home owners age 62 and older to instead consider a reverse mortgage.

“There are plenty of reasons to secure a reverse mortgage,” The Huffington Post writes. “People can use them to buy a second home. Some may choose to retire early. Others may want to start a business. They give some people a chance to travel or do their bucket lists before they get too old. For many others, it’s the money in the bank/peace of mind option that’s attractive to them.”

Home equity loans are declining in popularity because they’re income-based loans, which means as income decreases it becomes tougher to qualify for loans.


The Huffington Post offers these five reasons to consider a reverse mortgage: buy a second home, retire early, pursue a new career, travel and peace of mind.

Taking out a reverse mortgage as a line of credit can also help borrowers when financial hardships occur, The Huffington Post says, noting that a line of credit grows over time.

“Let’s say we get Alzheimer’s or have a stroke and need assisted living,” The Huffington Post says. “That’s the worst time in your life to worry about how you’re able to pay for it. You have so much going on, and everybody is stressed. You don’t want to make financial decision in a crisis. Yes, a reverse mortgage gives you peace of mind.”

Written by Cassandra Dowell

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  • The definition of a home equity loan is: “A home equity loan is a type of loan in which the borrower uses the equity of his or her home as collateral” per Google. Yet with a HECM, a borrower cannot borrow against the equity of the home if there is any lien against the collateral. When it comes to a HECM, it is the entire value of the home which is at risk to the extent of the balance due.

    The five reasons the article gives are old and generally attacked by senior consumer advocates. All of the reasons mentioned are less than prudent. Even taking out the HECM to have a line of credit is less than prudent, if there is no financial plan in place addressing in very general terms, the contingencies it will be used for and a commitment to mitigating the use of those funds by making a best efforts search for other sources to fund and offset the financial costs that such contingencies create. While the proceeds temporarily belong to the borrower, it is not income and one day must be paid back.

    Now we need to hear from those who promote the HECM for Purchase about why H4P was not even mentioned among the five uses. Why a second home and not the principal residence?

    While the article is positive about reverse mortgages, it adds little to helping seniors better understand HECMs generally and more importantly the need for seniors to have a prudent financial plan in place which they will stick. To get the best use of proceeds borrowers will also have to be committed to the financial plan being tweaked from time to time. So needless to say with the potential for a growing line of credit, seniors need to be evaluating the benefits of taking a HECM as soon as possible after initial age qualification rather than waiting until cash is needed.

    While it is great that we have more positive articles being published now than at any time in the last few years, it is also very apparent that few writers understand the product and its best and highest uses. While today’s HECM is a watered down version of the 2009 HECM, its potential uses in helping seniors retire with a brighter financial future have never been better understood. What is bothering is that the vast majority of those who write about HECMs are not familiar with the best information about preferred uses of HECM proceeds.

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