When it comes to using a reverse mortgage in retirement planning, there are several strategies that make the standby line of credit feature a must have in the eyes of financial advisors and their clients.
A few examples:
- A Reverse Mortgage Line of Credit is a hedge against rising interest rates because the growth factor on the credit line rises with interest rates, adding that the credit line can also hedge against falling home prices. Even if home values fall in the next 10-15 years, the line of credit isn’t tied to property value in the future, so if values fall the credit line is still growing.
- The “standby” strategy can help retirees delay drawing from Social Security, avoid dipping into other assets and provide a cash reserve to help weather market turmoil or sudden emergencies like health care costs or home repairs.“It’s another pot of tax-free money that can be used in any number of ways to provide income, protect assets and provide liquidity in the future.