Reverse Mortgage Fact #4

Fact 4: Most Reverse Mortgage Borrowers Choose a Line of Credit. According to the Federal Deposit Insurance Corporation, in 2021, over 90% of HECM borrowers opted to take either part or all of their proceeds as a line of credit. Source: US Department of Housing and Urban Development Annual Report 2021

An added benefit is that the borrowing power in the line of credit can grow at the same rate as the interest, plus the annual mortgage insurance premium (MIP) charged to the loan (0.50% of the principal). Even if the borrower’s home decreases in value, the mortgage line of credit will continue to grow at the same rate. Since HUD guarantees HECMs, lenders may not reduce, revoke, or freeze the line of credit.