Unlock Your Home Equity with a
HOME EQUITY CONVERSION MORTGAGE (HECM) LINE OF CREDIT
A HECM line of credit (LOC) is a type of reverse mortgage backed by the Federal Housing Administration (FHA) that allows homeowners 62 and older to access their home’s equity in a flexible way. Unlike a traditional home equity loan, a reverse mortgage line of credit cannot be frozen or reduced, it grows over time based on the loan’s interest rate, and it provides guaranteed access to funds regardless of market conditions.
Two Ways to Initiate a Conversation Without a Formal Application
1. Submit Basic Details Online
Submit your basic details so a licensed reverse mortgage specialist can review your scenario and provide a detailed, no-obligation estimate to help you better understand your loan options, rates, and fees.
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2. Talk to a Home Equity Expert
A licensed reverse mortgage specialist can answer your questions and help you analyze your equity scenario.
916-743-7230
HECM Line of Credit (LOC) Growth Feature
The line of credit option is the foundation of HECM retirement planning. It offers structural advantages designed for long-term flexibility rather than one-time access.
- Grows tax-free*
- Can be drawn tax-free**
- Funds can be accessed gradually over time
- Can serve as a stand-by emergency fund
- Acts as a hedge against longevity and market cycles
- Interest only accrues on money actually borrowed
- Unused credit increases over time
- FHA-insured security
- Allows prepayments and redraws
*Growth represents additional borrowing power.
**Draws are accessing equity, not income.
Because the reverse mortgage line of credit is insured by HUD through the FHA, access to available funds cannot be reduced or frozen due to changes in home values, market conditions, or the lender’s financial condition.
As long as the homeowner lives in the home as their primary residence, maintains the property, and stays current on property taxes and insurance, the line of credit terms must be honored.
If servicing is transferred, the new HUD-approved servicer must honor the original loan terms, including access to remaining credit for the life of the loan.
These protections are specific to FHA-insured HECM loans. Traditional bank HELOCs do not offer these guarantees and may be reduced or frozen at the lender’s discretion.
How Does the LOC Grow?
1. Organic Growth
Interest accrues only on borrowed funds. Unused credit does not accrue interest and grows over time at a rate tied to the adjustable interest rate plus the annual Mortgage Insurance Premium (0.5%).
Example: If the interest rate is 6% and MIP is 0.5%, available credit grows at 6.5% annually, compounded monthly.
2. Prepayment Growth
Prepayments increase the line of credit dollar-for-dollar. If you pay down $5,000, your loan balance decreases by $5,000 and your available credit increases by $5,000.
Important: The Growth Is NOT
- Income
- Interest earnings
- Investment returns
- A return on home equity
HECM (Home Equity Conversion Mortgage) Line of Credit Explained
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How Much May I Qualify For?
Try our reverse mortgage retirement calculator to estimate how much you may qualify for. These figures are estimates only. Contact your Loan Officer to review all available options.
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How a Reverse Mortgage Compares to Other Inflation Hedges
| Strategy | Inflation Protection | Liquidity | Tax Efficiency |
|---|---|---|---|
| TIPS or Bonds | Indexed to inflation; taxable interest | Moderate | Taxable annually |
| HELOC | Fixed limit; may be frozen | High | Taxable if used for non-home purposes |
| Cash Savings | Declines in real value during inflation | High | No tax-free growth |
| Reverse Mortgage | Growth increases with interest rates | High | Tax-free access to funds |
Line of Credit vs HELOC
| Feature | HECM Line of Credit | HELOC |
|---|---|---|
| No monthly principal & interest payment required | ✓ | |
| No minimum credit score required | ✓ | |
| Cannot be frozen or reduced | ✓ | |
| Available for life | ✓ | |
| Borrower retains home ownership | ✓ | ✓ |
| Unused credit grows over time | ✓ | |
| Government insured, non-recourse | ✓ |
Who Owns Your Home with a Reverse Mortgage?
Taking out a HECM does not mean you are selling or transferring ownership. You retain title to your home.
The loan does not need to be repaid as long as you live in the home as your primary residence, maintain the property, and stay current on taxes and insurance.
Key Benefits of a HECM Reverse Mortgage
FHA-Backed Security
Federally insured by the FHA with established homeowner protections.
No Monthly Mortgage Payments
Eliminate monthly principal and interest payments while living in your home. (Property taxes, insurance, and upkeep still required.)
Cash Your Way
Choose a lump sum, monthly income, line of credit, or combination. HUD limits first-year lump-sum withdrawals.
Family Protection Built In
Neither you nor your heirs will owe more than the home’s value at sale.
Stay in the Home You Love
Remain in your home while improving retirement cash flow.
Ways Loan Proceeds Can Be Taken
- Lump Sum: One large payout (HUD limits apply).
- Monthly Payments: Predictable income added to retirement.
- Line of Credit: Access funds as needed; unused credit grows.
- Combination: Mix payout options to fit your needs.