What is a Debt Consolidation Reverse Mortgage?

UPDATE: Rates have fallen to an 18-month low, pushing loan amounts higher. If you’ve looked at a reverse mortgage within the last year, and haven’t proceeded due to loan proceeds, you may want to look again.

What is a Debt Consolidation Reverse Mortgage?

During the Federal stimulus response to COVID-19, consumer debt decreased and personal savings rates increased – in the beginning. However, that was temporary. Savings then plummeted and debts are now higher than ever.

For homeowners aged 62 and older, the government-insured HECM (reverse mortgage) is, without a doubt, the most common reverse mortgage product. In fact, the HECM has become increasingly popular among retirees because it offers valuable assistance with cash flow, improves liquidity, supports tax planning, and even helps enhance their net worth. However, the greatest potential may be debt consolidation.

Additionally, debt consolidation is a financial strategy that combines multiple debts into a single loan, Often, they come with better terms like lower interest rates and payments. Besides, this can make debt management easier and save you money.

HECM Debt Consolidation uses a reverse mortgage to leverage housing wealth to pay off existing mortgages, installment debt, and revolving debt such as credit cards. You can consolidate all these loans into one single loan without a required monthly payment. Simply occupy the home and pay all property-related expenses such as property taxes and homeowners insurance. The amount you borrow plus interest is paid off when you permanently move from the home.

Note: The HECM will not pay off consumer debt directly at closing. Rather it provides the funds to you, and you pay the debts directly yourself.

Foreclosure: This may lead many to wonder why the CFPB feels that mortgage debt consolidation in Myrtle Beach SC increases the risk of foreclosure. Well, it does, with traditional lending. But here we are using a HECM, which does not require monthly payments, thus reducing the risk of foreclosure.

Debt: Dave Ramsey supporters will tell you to steer clear of this strategy because “all debt is bad”. But two things need to be noted; 1) Dave’s “debt snowball system” is terribly ineffective in paying revolving debt of 20%-30% and 2) Dave doesn’t deal with fixed-income clients often. It takes years for Ramsey’s followers to complete his suggestions.

Meanwhile, homeowners who implement the HECM debt consolidation strategy are thrilled to have a mortgage without a monthly payment. If they are concerned about the growing balance, they can always make payments to stay on top of the interest accumulation – of any amount they choose, voluntarily.

In today’s high-rate environments, a reverse mortgage in Myrtle Beach SC should be used for a wide spectrum of financial planning purposes like tax strategies, ROTH conversions, Social Security filing decisions, long-term care planning, portfolio optimization, and yes, debt consolidation. But to prevent consumer debt from accumulating again, you must have discipline and a solid plan.

Stay safe everyone, and may God bless you all – David Stacy. Call David Stacy Reverse Mortgage Specialist now.

David Stacy Reverse Mortgage Specialist
Myrtle Beach, SC 29577
(843) 491-1436
https://www.reverse-info.com

Reverse Mortgage Specialist
Columbia, SC 29205
843-491-1436
https://www.reverse-info.com/areas-served/columbia/

South Carolina Reverse Mortgage Services
Charleston, SC 29401
843-491-1436
https://www.reverse-info.com/

Reverse Mortgage Specialist
Greenville, SC 29607
(843) 491-1436
http://reversemortgagegreenvillesc.com/