Older couple driving an RV

With retirement around the corner, you may have big plans for filling your more flexible schedule. One of our recent posts explained many of the ways a reverse mortgage can expand your travel options. Now we’ll talk specifically about using a Home Equity Conversion Mortgage (HECM) to take your retirement on the road.

Your House is Still Your Home

Since a HECM is a loan for homeowners 62 and older, it is dependent on the equity available in your primary residence. If your mobile retirement plans include giving up entirely on a fixed home base, a reverse mortgage is not the solution.

However, it may be an avenue worth exploring if you plan to split time between your current home and your travels. The key is to continue to pay the taxes and insurance on your permanent home, as well as meet the requirements necessary to maintain its status as your primary residence. With those conditions met, you will be able to borrow a portion of your equity and use it as you’d like during retirement, including to support the purchase and use of a motorhome or travel trailer.

Lots of Options

Of course, any retiree with dreams of trekking across America’s highways will have options to choose from. Depending on their budget and preferences, they may opt for a fully motorized vehicle or a small trailer that needs to be towed to its destination. Regardless, it’s essential to have a long-term plan for the purchase and avoid seeing any of the proceeds from a HECM go to waste.

Newcomers to the lifestyle should consider renting a comparable option for a short trip before committing to buying. It’s also important to consider any additional expenses, such as maintenance, campground fees, or a vehicle capable of towing your new home away from home. Renting out your current home while you’re gone can offset some of these costs, but remember not to jeopardize your HECM eligibility by losing its status as a permanent residence.

Best of Both Worlds

One of the features of a reverse mortgage that can increase its appeal is the flexibility in disbursement. Borrowers can opt to receive funds in an immediate lump sum or as regular payments over time. Another possibility is to choose a hybrid plan that provides a monthly payout and access to a line of credit.

For homeowners looking to ease into spending more of their retirement behind the wheel, this approach can subsidize the initial expense and continue to supplement your income into the future.

Find out more about the retirement advantages of a reverse mortgage on our website or by calling to speak with a representative today.

Things to know about Reverse Mortgages:
  • At the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds
  • Charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums and servicing fees
  • The loan balance grows over time and interest is charged on the outstanding balance
  • The borrower remains responsible for property taxes, hazard insurance, and home maintenance, and failure to pay these amounts may result in the loss of the home
  • Interest on a reverse mortgage is not tax-deductible until the borrower makes partial or full re-payment
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