Pay Off Debt, Reserve Future Borrowing Power

Some seniors want to supplement their income with a monthly tenure payment or a credit line, but ridding themselves of an existing debt burden is their highest priority. They would specify the amount of cash they need to pay off their debts, and take the balance of their borrowing power either as a monthly payment or a credit line.

If the senior’s existing debt is a mortgage on their home, they must pay it off, whereas paying off credit card and other debt is optional. However, the interest rate on other such debt is almost bound to be higher than the rate plus insurance charge on the HECM. This means that the savings from paying it off with the HECM are likely to be substantial.

In or near retirement? The Professor’s Retirement Funds Integrator (RFI) might enhance your life during retirement.

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