Credit Line vs Reverse Mortgage

I read the fine print: that's what I do to ensure you get a solution that fits your needs rather than the flavour of the week. In the fine print of a credit line agreement it says ( or a version of ) :

Your credit limit, interest rate, minimum payments required and other terms of your line of credit agreement may be changed at our sole discretion and without prior notice to you…

While a bit harsh, conditions such as the above are in fact part what allows the great rates offered on lines of credit.  However as it pertains to seniors, possibly your parents and grandparents, these hallmarks of a “demand loan” provide little in the way of piece of mind.

A reverse mortgage on the other hand, has a number of structural features that guarantee greater lending safety for the client:

1. No payments required – if rates do ever increase, this will at least guarantee that there will be no additional impact on their monthly cash flow and that’s on top of the zero impact it has all along.
2. No maturity date – as long as a client lives in their home they can enjoy their reverse mortgage.  There is no age limit, so if a 55 year old lives to 110 years of age, that’s 55 years they will have the loan.
3. No need to re-qualify – this is true even if property values decrease. 
4. No reduction of credit limits – you get to keep what we said you can have from the start.
5. Clients are never asked to move, sell or repay their loan – even if changing valuations cause the LTV to become higher.
6. Clients, or their estate will never owe more money that the value of their home – a reverse mortgage is fully secured by their home alone.  In the very unlikely event that their debt becomes larger then the value of their home  (it has happened less that a dozen times in the 26 years CHIP has been in business), we will take the loss, regardless of other client or estate assets.

However all this comes at a cost, that is a small cost.  Homequity Bank’s current variable rate for example is 4.75%

So if you are retired or know someone who is and they are considering financing, they may be a little on the risk averse side. Consider mentioning how a reverse mortgage might be able to uniquely help them and it may go a long way to improving their piece of mind.  Let me know if I can help- it's the cornerstone of customer satisfaction.