Mortgage Killer Accelerator

Strategy 12 of 107

Reverse mortgage (HECM) to retire the payment, 62 and over

Depends on markets or variable ratesFrom borrowing against another asset (moves the debt, does not erase it)

What it is

A federally insured reverse mortgage (HECM) can pay off the existing mortgage at closing.

Steps

  1. A federally insured reverse mortgage (HECM) can pay off the existing mortgage at closing.
  2. No monthly principal-and-interest payment is due while you live in the home and keep up taxes, insurance and upkeep.
  3. The loan is repaid when the home is sold or the last borrower leaves.

Repeat: Once.

Measure: The monthly payment removed against the loan balance that grows each year.

This one does not fit the calculator.

Risks

  • The balance grows; less equity remains for heirs.
  • Missing taxes or insurance can trigger repayment.

Who it fits

Grandmas and grandpas (62 and over)

Needs

62 or older

How predictable

Depends on markets or variable rates

A worked example (hypothetical, not guaranteed)

Picture a hypothetical household (grandmas and grandpas (62 and over)). They owe $300,000 at 6.5% with 30 years left. The required payment is $1,896 a month, and that payment, which comes from income, never changes in this example.

They follow the steps: a federally insured reverse mortgage (HECM) can pay off the existing mortgage at closing.

This strategy changes who owns the home rather than the loan, so it has no payoff date to compute. Read the risks closely before going further.

Sequences that use it

  • Later-life cycle: Right-size with the home-sale exclusion, or retire the payment with a HECM. Both trade equity for freedom from the payment.

Sources and more information

Where to get help

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