Retirement Fund Too Small? A Reverse Mortgage Can Increase Retirement Income

The tenure payment option offered by the HECM program provides seniors with additional monthly income for as long as they live in their house, It ceases when the borrower dies or moves out permanently.

A valuable feature of the tenure payment is that, relative to cash withdrawal, debt accumulation in the early years is slower because equity is reserved for future payments. For example, after 5 years, the debt of a 72-year old who takes the largest possible tenure payment is only about one-third as large as the senior who withdraws the maximum amount of cash. This means that if the borrower dies early, her estate is substantially larger if she had taken the tenure payment.

Further, seniors who take a tenure payment can modify their transaction at any time by paying $20 to the servicer. For example, the senior who finds that the monthly tenure payment won’t be needed for awhile can switch the unused equity to a credit line, which will grow in size from that point on. In the opposite case, the senior who needs a larger payment can switch to a term payment.

To see how much your tenure payment can be, click on  Go to Step 1 and fill out the information form, then click on Continue to Step 2 below the table.

On the Step 2 page, scroll down to the third block where you will see the largest tenure payment you can command. While on Step 2, you can also explore other HECM options, including monthly payments over a limited period, upfront cash withdrawals, credit lines, and combinations of these options. For example, if you want to mix a tenure payment with a credit line or cash withdrawal, scroll down to the last block and click on "View Prices" there.

When you have identified the HECM option you want, go to Step 3 by clicking on "View Prices." This will show you interest rates, fees, and a Saver option for minimizing fees. If you need help, we are available.

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