REVERSE MORTGAGE. Line of Credit Guide ENHANCE. your retirement PLAN

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1 REVERSE MORTGAGE Line of Credit Guide ENHANCE your retirement PLAN (800)

2 Line of Credit Fact: The available funds in your line of credit can increase in value over time.

3 (800) WHAT'S INSIDE? 02 WHAT IS A REVERSE MORTGAGE LINE OF CREDIT? 09 LINE OF CREDIT GROWTH OPPORTUNITY EXAMPLE # WHY SHOULD YOU GET A REVERSE MORTGAGE LINE OF CREDIT? 13 WHAT ARE SOME FAQS? LINE OF CREDIT GROWTH OPPORTUNITY EXAMPLE #1 Copyright 2018 One Reverse Mortgage, LLC. All Rights Reserved. 1

4 REVERSE MORTGAGE: LINE OF CREDIT GUIDE WHAT IS A REVERSE MORTGAGE LINE OF CREDIT? The reverse mortgage line of credit (RMLOC) is one way you can choose to receive your proceeds if you have an adjustable rate reverse mortgage. With this option, your proceeds are funded in a line of credit that you can access whenever you need to and use however you want. In fact, many financial advisors are recommending the line of credit be used as a financial tool in retirement planning. This option is similar to a traditional home equity line of credit. However, there are some additional benefits available to older homeowners who choose the RMLOC over the HELOC. What Makes the Reverse Line of Credit a Better Option than a Traditional Line of Credit? Reliability. As long as you stay in your home and pay your homeowners insurance and property taxes, the line of credit cannot be suspended or called due. Payment Flexibility. While you can make payments to your loan if you want, no monthly mortgage payments are required. You can pay as little or as much as you want. Borrowing Power. Any unused funds in your line of credit increase in value over time, giving you access to more money later. What are the Requirements of a Line of Credit? You must continue to pay your property taxes, homeowners insurance, and home maintenance costs to avoid foreclosure. You must keep a minimum balance of $50 in your line of credit at all times. 2

5 (800) WHY SHOULD YOU GET A REVERSE MORTGAGE LINE OF CREDIT? The reverse mortgage can be beneficial both now and in the future. As with any reverse mortgage option, you are able to use the line of credit however you want. Here are the many ways clients can use this option. Solve for a Financial Need Now Have access to money when you need it. Increase your monthly savings. Create an emergency fund. Pay off your existing mortgage. Use as a buffer during stock market volatility. Enhance Your Retirement Plan for the Future Add another dependable money source to a plan that already includes your savings and social security. Extend your retirement savings by using funds from the line of credit first. Defer drawing money from other retirement assets and allow them to grow in value. Leave the line of credit untouched, so the available funds can increase over time. This provides access to more money in the future. See how a reverse mortgage line of credit can work in your life with a custom scenario based on your own numbers! Our licensed specialists can provide an estimate of how much you can get and how it can grow in value over time. They can also show you how much money you can save each month. Call us now to get a personalized financial picture of your life with a reverse mortgage line of credit. For other examples of how people use a line of credit, turn to the next few pages. 3

6 They can access 44% of their equity at age 65. Example 1: Sarah & Jack Age: 65 Current Mortgage Balance: $0

7 (800) LINE OF CREDIT GROWTH OPPORTUNITY EXAMPLE #1: Sarah and Jack own their home free and clear. Sarah and Jack are 65 years old and own their $500,000 home free and clear. Based on their age, home value, and current interest rates, they can qualify for 44% of the equity in their home, or $218,500. After rolling their closing costs into the loan, they have $202,500 available funds left in their line of credit. If they do not access any of their proceeds for ten years, they will have access to $363,299 when they are 75. The graph below details how their line of credit will increase over time. Sarah and Jack's Line of Credit Growth Over 10 Years 400,000 $363, ,000 Line of Credit $321, , , ,000 $202,500 $226,015 $256,231 $286, , ,000 0 Age 65 Age 67 Age 69 Age 71 Age 73 Age 75 Rate of change based on 6/1/ year LIBOR index and estimates of future rates and home value appreciation derived from Moody s Analytics from 6/1/2018. A borrower s unused line of credit compounds throughout the life of the loan at same rate the borrower pays on any used credit. Tenure payments will continue as long as the loan remains active. Results may vary. 5

8 REVERSE MORTGAGE: LINE OF CREDIT GUIDE HOW CAN SARAH AND JACK RECEIVE THEIR FUNDS? 1 2 Get Money as Needed If Sarah and Jack do not need money right now, they can simply pay their closing costs to open the line of credit and not take any of their available funds. Since the line of credit sits untouched with no withdrawals for ten years, the $202,500 increases in value during that time. At age 72, the home value is projected to be $271,135 based on a projected home price appreciation of 43% over the ten-year period based on Moody s Analytics. Get Money in Monthly Distributions Many people decide to receive monthly distributions from their line of credit. Receiving money each month from a line of credit can allow you to delay accessing other retirement assets so they can continue to increase in value. For example, if you wait to access social security, it will be worth more when you do. Here are the monthly amounts Sarah and Jack could receive from their reverse mortgage if they begin receiving distributions from day one or if they wait to start drawing in the future. Get $1,062 $1,506 $2,186 $3,301 each month beginning at age 65 * Get each month beginning at age 70 * Get each month beginning at age 75 * Get each month beginning at age 80 * *Monthly Payout amount is based on HECM conversion to a Tenure payment plan with no prior draws on the line of credit until conversion. No line of credit draws permitted after tenure conversion without converting back to a payment plan with a line of credit option. Results may vary. 6

9 (800) BY WAITING, THEY DECREASE THEIR GROWTH OPPORTUNITY If Sarah and Jack wait 5 years to start their line of credit, they will reduce their available funds by 17%. To take advantage of their line of credit s growth opportunity, they need to get a reverse mortgage line of credit as early as possible. When Sarah and Jack open their line at age 65 and allow their available funds to grow, they will have $271,135 in their line by the time they are 70. In comparison, if they wait to open their line until age 70, they will only have $226,627 available to them at that time. By waiting, they will miss out on having an extra $44,508. By waiting 5 years to start 17% less money available which equates to $44,508 7

10 He can access 42% of his equity at age 62. Example 2: Richard Age: 62 Current Mortgage Balance: $27,811

11 (800) LINE OF CREDIT GROWTH OPPORTUNITY EXAMPLE #2: Richard has a mortgage balance of $27,811. Richard is 62 years old and owns a $300,000 home. He has five years left on his existing mortgage, with a balance of $27,811. Based on his age, home value, and current interest rates, he can tap into 42% of the equity in his home, or $125,100. His reverse mortgage proceeds first pay off his existing mortgage and the closing costs associated with his new loan. After using his proceeds to pay those costs, he now has $85,289 available funds left in his line of credit, and no required monthly mortgage payment. He knows he must continue to pay his property taxes and homeowners insurance and maintain his home. While he can access money at any time, if he does not access any of his proceeds for ten years, he will have $153,067 available in his line of credit when he is 72. The graph below details how his line of credit will increase over time. 175, , , ,000 75,000 Richard's Line of Credit Growth Over 10 Years $85,289 Line of Credit $95,222 $107,958 $120,718 $135,574 $153,067 50,000 25,000 0 Age 62 Age 64 Age 66 Age 68 Age 70 Age 72 Rate of change based on 6/1/ year LIBOR index and estimates of future rates and home value appreciation derived from Moody s Analytics from 6/1/2018. A borrower s unused line of credit compounds throughout the life of the loan at same rate the borrower pays on any used credit. Tenure payments will continue as long as the loan remains active. Results may vary. 9

12 REVERSE MORTGAGE: LINE OF CREDIT GUIDE HOW CAN RICHARD RECEIVE HIS FUNDS? 1 2 Get Money as Needed Richard can start a line of credit without withdrawing any money, but he does need to maintain a $50 balance to keep the line open. With the line of credit, the unused funds increase in value over time giving him more money available to access in the future. The amount of money available is not affected by changing home values. Get Money in Monthly Distributions Richard has the option to receive monthly distributions from his line of credit. Receiving money each month can help Richard pay for living expenses or unexpected costs without needing to withdraw from his savings. Here are the monthly amounts Richard could receive if he begins receiving distributions from day one or if he waits to receive money in the future. Get $435 $611 $875 $1,018 each month beginning at age 62 * Get each month beginning at age 67 * Get each month beginning at age 72 * Get each month beginning at age 74 * *Monthly Payout amount is based on HECM conversion to a Tenure payment plan with no prior draws on the line of credit until conversion. No line of credit draws permitted after tenure conversion without converting back to a payment plan with a line of credit option. Results may vary. 10

13 (800) BY WAITING, HE DECREASES HIS GROWTH OPPORTUNITY If Richard waits 10 years to start his line of credit, he will reduce his available funds by 15%. At 62, Richard is the perfect age to get his reverse mortgage line of credit. That s because it is the earliest he can get one and it will give him the most time to grow his available proceeds. When Richard opens his line at age 62 and allows it to grow, he will have $153,067 in his line by the time he is 72. In comparison, if he waits to get a reverse mortgage line of credit until he is 72, he will only have $130,129 available to him at that time. By waiting, his available funds are decreased by $22,938. By waiting 10 years to start 15% less money available which equates to $22,938 11

14 Line of Credit Fact: Many financial advisors recommend their clients include the reverse mortgage line of credit as part of their retirement plans.

15 (800) WHAT ARE SOME FAQS? Q1 What if my home values decline? A The reverse mortgage line of credit is not affected by the housing market. In fact, the available funds in your line will continue to increase in value even if home values decline. It is also a non-recourse loan, meaning you will never owe more than your home is worth. If your home sells for less than what is owed on the loan, FHA insurance will pay the difference. Q2 Can I get the line of credit if I m in my 70s or older? A Yes. Even if you are older than the examples provided in this guide, you can still benefit from the reverse mortgage line of credit. While we recommend getting the reverse mortgage line of credit as early as possible, you can still benefit from this financial tool and the flexibility it offers. Q3 What happens if I leave my home? A If you leave the home, you or your heirs have a few options. You can sell the home to pay off the loan and keep any remaining proceeds from the sale. Your heirs can purchase the home for what is owed on the loan or 95% of the appraised value. Or, you can sign the deed over to the lender. Q4 Is this product recommended by financial professionals? A Yes. Many financial advisors recommend their clients use the reverse mortgage line of credit in their retirement plans. In recent years, many financial media outlets have also touted the financial advantages a line of credit has in retirement. Call (800) to get a personalized scenario based on your numbers! 13

16 (800) Eastgate Mall Suite 320 San Diego, CA Woodward Ave Detroit, MI These advertisements and materials are not provided nor approved by the U.S. Department of Housing and Urban Development (HUD) or the Federal Housing Administration (FHA) One Reverse Mortgage is a licensed mortgage lender. The following states require disclosure of licensing information. (If your state is not listed, it doesn't require a specific license disclosure or we are not currently licensed in that state.) AZ: One Reverse Mortgage, LLC, 1 N. Central Ave. Suite 1610, Phoenix, AZ, 85004; Mortgage Banker License # ; AR: One Reverse Mortgage, LLC, 4445 Eastgate Mall, Ste 320, San Diego, CA, 92121; Mortgage Lender/Mortgage Broker - License # 42785; CA: Licensed by the Department of Corporations under California Finance Lenders Law - License # and Residential Mortgage Lending Act - License # ; GA: Residential Mortgage Licensee (#23385) Eastgate Mall, Ste 320, San Diego, CA, 92121; IL: Residential Mortgage Licensee #MB Department of Financial and Professional Regulation, 208 South LaSalle Street Suite 814, Chicago, IL (312) , 4445 Eastgate Mall, Ste 320, San Diego, CA, 92121; KS: Licensed Mortgage Company, One Reverse Mortgage, MC ; ME: One Reverse Mortgage, LLC, Supervised Lender License #SLM10965; MA: One Reverse Mortgage, LLC, Mortgage Lender License #MC 2052; NV: One Reverse Mortgage, LLC 8275 South Eastern Avenue, Suite 200, Las Vegas, NV 89123, License #1984; NH: Licensed by the New Hampshire Banking Department #10940-MB; NJ: New Jersey - One Reverse Mortgage, LLC., 4445 Eastgate Mall, Ste 320, San Diego, CA, 92121; (810) , Licensed by the N.J. Department of Banking and Insurance; NY: Licensed Mortgage Banker, N.Y.S Banking Department, License #107328; OH: One Reverse Mortgage, MB ; Oregon - License #ML-3511; PA: Licensed by the Department of Banking - License # 21860; RI: Rhode Island Licensed Lender; TX: One Reverse Mortgage, LLC 4445 Eastgate Mall, Ste 320, San Diego, CA, 92121; VA: One Reverse Mortgage, LLC., NMLS ID #2052 ( WA: Consumer Loan Company License - CL Equal Housing Lender, One Reverse Mortgage Nationwide Mortgage Licensing System Number 2052 One Reverse Mortgage LLC, 4445 Eastgate Mall, Ste 320, San Diego, CA 92121