What is a HECM line of credit?

A HECM (Home Equity Conversion Mortgage) line of credit is a feature of a reverse mortgage that allows you to borrow against your home equity as needed. The unused portion of your line of credit grows over time, increasing the funds available to you.

How does the line of credit growth feature work?

The unused portion of your HECM line of credit grows at a rate equal to the loan’s current interest rate plus the annual mortgage insurance premium (MIP) of 0.5%.

For example, if your loan interest rate is 5%, your unused credit line increases by 5% annually. Over time, compounding can significantly increase the total funds available.

Why is line of credit growth important?

The line of credit growth feature provides:

Flexibility:

Access more funds over time as your credit line grows.

Inflation protection:

The growth rate can help offset rising costs of living.

Financial security:

Creates a financial safety net for unexpected expenses or long-term needs.

What factors influence line of credit growth?

The growth of your line of credit depends on:

• ●      The unused portion of your credit line.
• ●      The interest rate applied to your loan.
• ●      The length of time the funds remain unused.

The longer you leave your credit line unused, the more it will grow.