HECMs Can Address These 3 Retirement Risks

It’s common for retirees seeking to secure their financial future to encounter significant risks. Typical concerns include paying for long-term care, managing cash flow, and accessing equity to supplement income or cover expenses. A Home Equity Conversion Mortgage (HECM) reverse mortgage is a powerful tool that may help retirees address these challenges effectively without negatively impacting their cash flow. Here’s how a HECM reverse mortgage can solve three major retirement problems:

1. Paying for Long-Term Care: A Flexible Alternative to Insurance

LawforSeniors.org notes, “Premiums for LTCI are relatively high.? The average premium is $3,000 to $6,000 per year, depending on age, sex, health, the maximum daily benefit, the benefit period, and the elimination period (or how long the policyholder must wait before benefits are paid)”. Furthermore, premiums are not fixed and increase over time.

Additionally, retirees may be unable to qualify for LTCI due to health conditions or age. This is where a FHA HECM reverse mortgage provides a unique solution.?

By tapping into their housing wealth older homeowners can use the proceeds from a reverse mortgage to cover LTC expenses as they arise. Here’s how:

Directly pay for care: Instead of paying premiums for LTCI, retirees could draw from their HECM line of credit to fund home healthcare, assisted living, or nursing home care. This offers flexibility, allowing retirees to only pay for care when needed, avoiding ongoing insurance premiums that may not provide immediate value.

Redirected Payments: Also, homeowners with significant [CONTINUE READING ]