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How a HECM Safeguards Against Inflation, A Thief in the Night

We are living longer, and the inflated costs of living and maintaining our homes are increasing rapidly. Each person must act to protect themselves against the silent thief of inflation, which left unchecked will steal our future financial security.

This reality requires the effective use of all our assets including home equity, for our retirement savings to last.

Events of the last 18 months have caused all of us to rethink, and reassess our financial well-being.

The Asheville Team of Fairway Independent Mortgage Corporation takes a strategic planning approach to every mortgage we originate.

My specialty on the Team is assisting our homeowners age 62 and better with home equity solutions to help mitigate retirement savings risks.

Today we are providing you an update on the corrosive effects inflation will likely have on your retirement income plans, and what you can do about it.

A recent CNBC Article linked below illuminates the inflation issue and how your home equity can provide you protection.

Fighting inflation with a FHA Insured Home Equity Conversion Mortgage (HECM). What retirees need to know.

Inflation May Erode your Purchasing Power in Retirement

The consumer price index increased by 0.8% from April to March and surged 4.2% from the previous year, the biggest jump since September 2008.

When the costs to sustain your lifestyle rise rapidly, this increases the likelihood of running out of money in later years. There are some pro-active steps you can take using home equity now, which may help protect you from the worst effects of inflation.

Question: How can the equity sitting in your home help you in retirement?

Answer: By converting a portion of your Home Equity to cash, accessed through a growing line of credit.

As a longtime homeowner you may be familiar with a traditional Home Equity Line of Credit, known as a HELOC.

Rarely do we recommend a HELOC once a homeowner turns 62. As a matter of fact, several large banks stopped offering home equity lines of credit amid the economic uncertainty of the last 18 months.

Traditional HELOC’s carry risks for older Americans, that the FHA HECMs do not.

For these and other reasons, we recommend the FHA insured Home Equity Conversion Mortgage (HECM) a growing Equity Line of Credit, only available to those 62 or older.

  • With a HECM Equity Line Of Credit you pull cash out whenever you need it, and any draws are tax free which do not require any repayment until the last remaining borrower leaves the home permanently.
  • As always, you will continue to pay for Property Taxes and Homeowners Insurance

Provide and Protect with a Home Equity Buffer Account

A basic rule of retirement income planning goes like this: Always shore up your Lines Of Credit when you don’t need them so they are in place when you eventually will!

We invite you to view the short video below about using a FHA insured reverse mortgage to protect your portfolio.:

 

If you share any of these concerns, contact us to start a conversation about a home equity plan for you and your family.

Together we will:

  • Evaluate your current Mortgage Structure
  • Assess the Home Equity you have available to convert into a HECM Equity Line of Credit
  • Put in place some protections against the silent thief of Inflation

Our home is one of our largest and most valuable assets. Home Equity can provide us with protections against many of the unknown risks the future has in store for all of us!

My Best,
~ Paul

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