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The HECM as a Risk Reducing Strategy for Older HELOC Borrowers
Risk. It’s one thing we should help older homeowners reduce especially in their retirement years. Besides health care costs, long term care and unforeseen emergencies there remains one common risk that many homeowners and even reverse mortgage originators overlook. HELOCs or Home Equity Lines of Credit. Many of our prospective borrowers already have an appetitie for home equity as evidenced by their history of cash out refinances or more notably an existing home equity line of credit. HELOCs have begun to resurge in the mortgage market as home values have nearly recovered from their pre-crash values and today’s artificially low interest rates. While banks make these loans attractive to the average consumer what is often overlooked or not expressly pointed out are the risks and limitations.
First a HELOC can be taken away just as easily as it was given. If we see another fall in home prices those holding a HELOC could get the same rude awakening…
Download a transcript of this episode here.
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