Cliff AuerswaldPresident, All Reverse Mortgage, Inc. · President at All Reverse Mortgage, Inc. (ARLO™) NMLS#14041 Company NMLS #13999

Reverse Mortgage Line of Credit Growth Explained

29 Nov 2023 · 1 min

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1:00

The video explains that a reverse mortgage line of credit (HECM‑LOC) is designed to increase its available balance over time. The lender is required to raise the borrower’s credit line each month by the same interest rate applied to any outstanding balance, effectively growing the line at a rate similar to market interest rates (often 8‑9% depending on margins). This growth feature is likened to a credit‑card‑style line that can sit idle for borrowers who don’t need immediate funds, providing them with more available money later in the loan’s life. The speaker highlights the appeal of this guaranteed growth for homeowners who want a flexible source of future cash.

Chapters

A reverse mortgage line of credit is guaranteed to grow in availability, and that is a very unique feature of the program because it offers you more money over the life of the loan. The line of credit has this growth feature attached to it, which is appealing to a lot of people that don't need it right away. So you might want to just set up the line of credit and let it sit there. It's not interest in the bank per se. It's kind of like a credit card. Every month you'll start off with a line of credit. Let's just say $100,000. We are required as a lender to increase your available line of credit by the same exact interest rates that we're charging your outstanding balance. There's many people that are just benefiting greatly by just looking at their line of credit growth every single month. You might be seeing 8-9% growth on your line of credit depending on what margin you have and what interest rates are doing in the market. It's going to grow over time, which is going to give you a lot more money down the road.