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Golden Handcuffs: Why Loan Structure Matters

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The Overlooked Advantages of the Tenure Payout Option

loan-choices

As the Home Equity Conversion Mortgage evolved rapidly in recent years it is fair to say our target demographic has substantially changed. The financial assessment was the capstone in HUD’s efforts to bolster the product’s financial viability for both borrowers and the mutual mortgage insurance fund. Today as we move toward more affluent borrowers we must exercise caution when suggesting loan payout options.

Ultimately it is the borrower’s choice but we cannot overlook the responsibility of full disclosure. Consider a qualified borrower wth a small mortgage payoff and a substantial net principal limit. This individual has shown a propensity to spend beyond their means and perhaps had several other debts. Such an individual is highly unlikely to utilize the strategic use of a line of credit for a standby reverse mortgage. In fact an open line of credit may be an enticing source of money to…

 

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