Listen To This Article
In the 1980s, Heinz ketchup famously reminded us that “Good things come to those who wait.” And if you’re in your 40s or 50s eagerly eyeing a Home Equity Conversion Mortgage (HECM), waiting is your only option until age 62. But once you have reached that milestone, the real question becomes: Should you keep waiting to secure a reverse mortgage… or is now the smarter move?
For years, conventional wisdom suggested delaying a reverse mortgage as long as possible. But today’s HECM landscape — and today’s typical borrower — look very different. Regulatory improvements in 2013 and 2015 strengthened the program for long-term sustainability, and many homeowners now open a HECM line of credit early, not because they need the money, but because they understand its strategic planning advantages.
Today, more HECM applicants are 62, still employed, and have no immediate need for cash. They recognize that a HECM line of credit provides secure access to home equity and a powerful buffer against market uncertainty. For them, waiting literally doesn’t pay.
Here are three compelling reasons why acting sooner often delivers greater benefits.
- A HIGHER PRINCIPAL LIMIT IN THE FUTURE IS NOT GUARANTEED
Your initial principal limit (the maximum available from a HECM) is determined by three factors:
1) your age, 2) interest rates, and 3) your home’s appraised value.
Only one of these is predictable. Yes, you will get older. But interest rates and property values? They’re anything but certain.
Rising rates can sharply reduce your borrowing capacity, while falling home values can erase years of appreciation. Many homeowners assume that time alone translates into a higher principal limit. In reality, waiting exposes you to market conditions that could easily reduce — not increase — your available proceeds.
- DELAYING SACRIFICES LINE-OF-CREDIT GROWTH
One of the HECM’s most powerful yet overlooked features is the compounding growth of the unused portion of a line of credit.
Once your loan is in place, your available credit grows automatically at the same compounding rate as your loan balance (your interest rate + 0.50%). Even better, you’re not charged interest on any undrawn funds. Opening the line earlier simply gives compounding more years to work in your favor.
Voluntary payments also boost borrowing capacity dollar-for-dollar, meaning your line of credit can grow even faster. Over a long retirement, this growth can create a substantial and secure pool of accessible funds, but only if you’ve established the line early enough to capture that compounding.
- YOU CAN STRENGTHEN YOUR RETIREMENT STRATEGY IMMEDIATELY
Modern retirement planning blends multiple tools to guard against risks like market volatility, long-term care expenses, and rising health insurance costs. A HECM line of credit fits seamlessly into this framework.
For some, the benefit is as straightforward as eliminating a required monthly mortgage payment. For others, it becomes an emergency fund, a tax-planning resource, or a way to avoid selling investments during downturns. Regardless of how you use it, establishing the line earlier provides more flexibility, more security, and more options — exactly when you may need them most.
If you’re already 62 or older, the question isn’t “Why now?” It’s “Why wait?”
Good things may come to those who wait, but with reverse mortgages, even better things come to those who act early.