The BEST Kept Secret in Retirement Planning: "The Line of Credit" Growth Feature in The Reverse Mortgage.

FACT: The line of credit growth feature in a Reverse Mortgage, specifically a Home Equity Conversion Mortgage (HECM/FHA), is one of its most powerful and unique benefits. It allows unused credit to grow over time, giving you access to more money in the future—independent of your home's value.

Many financial advisors recommend implementing a Reverse Mortgage as early as possible. This allows the Line of Credit time to grow and compound, yielding superior equity cash growth. This “growth” matches the loan interest rate plus 0.5% (HECM). If it’s not needed right away, the longer you leave it untouched, the more powerful it becomes.

Key Benefits of the Line of Credit Growth Feature:

A. Increased Access to Funds Over Time Provides more flexibility in later years when expenses may rise (e.g., healthcare) and helps you hedge against inflation and future financial uncertainty.

B. Tax-Free Source of Liquidity Withdrawals are not considered taxable income, which can help manage taxes and protect retirement income plans.

C. Delay Portfolio Withdrawals In down markets, you can draw from the Reverse Mortgage line instead of selling investments at a loss.

D. Can Be Used as a Standby Reserve Even if you don’t need the money now, setting it up early allows the credit to grow, enhancing future security.

E. Legacy Planning! Gift your heirs the inheritance while you are still alive! You will leave more, not less, when implementing the use of a Reverse Mortgage.

F. Non-Cancelable and Government-Backed As long as loan obligations are met (home maintenance, taxes, insurance), the line cannot be frozen or canceled—unlike a traditional HELOC, which can be canceled at any time at the will of the servicing lender.

Story:

In 2008, during the historic Mortgage Melt-Down crisis, lenders all across the country froze, cancelled, and called “due and payable” Home Equity Lines of Credit. This lasted for almost 3 years, compounding the financial crisis and destroying homeownership.

A Reverse Mortgage CANNOT be cancelled or called “due and payable” due to adverse market conditions or decreasing housing market values.

Disclaimer: The information provided is based upon education, solid knowledge, experience, and research; however, it should not be considered professional legal advice. Consult a legal professional with regard to your specific situation.