Reverse Mortgage Guide

Across the country major lenders have begun to reign-in home equity lines of credit (HELOCs). The result is that many homeowners who thought they had a warm and comfy financial lifeline have been left out in the cold.

Imagine that you have a $100,000 line of credit — cash availability secured by your home for emergencies, as an alternative to auto financing, money to start a business, cash to help pay for a college education or money toÂprevent foreclosure.

Now imagine that you get a letter from your lender which says your HELOC account has been frozen or that your line of credit has been reduced. Suddenly cash and credit that you counted on are no longer available.

Lenders are reducing access to HELOCs because as home values fall lender risk increases. You can understand the lender’s worry — but you can also understand that homeowners have counted on the money available from a home equity line of credit.

While HELOCs may be uncertain, reverse mortgages are not. With a reverse mortgage you can get money from your property and not have to make monthly payments.

Is a reverse mortgage a substitute for a HELOC? For some homeowners a reverse mortgage may well be an appropriate way to get cash from a home without selling. For others, a reverse mortgage is not the right financial product.

As is always the case, speak with an independent financial adviser such as an attorney who specializes in elder law when considering the pros and cons of a reverse mortgage.

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This entry was posted on Monday, August 25th, 2008 at 5:06 am and is filed under Uncategorized . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.