Consider a Reverse Mortgage Sooner Rather than Later
Reverse mortgages are often stigmatized as a last resort financial option for retirees. This couldn’t be farther from reality. These types of loans could be a proactive way to explore your retirement plans—one in which you’re able to use home equity as an emergency lifeline for cash in your daily life, especially during periods of financial uncertainty like now.
Think About Your Long Term Physical and Financial Health
Health expectancy plays a major role in retirement age decision-making. It isn’t easy to do, but discussing the number of years that you and your spouse expect to live “impairment-free” is important. If the answer isn’t as long as you’d like because of financial difficulties, a reverse mortgage could be used as a cushion to prolong your active lifestyles, supplementing grocery expenses, medication costs, and more.
It’s important to review your investments and savings accounts as well. Recent global events have highlighted how quickly financial situations can change. Your stocks and investments could dramatically lose value, leaving you financially unprepared tomorrow. Increased resiliency against market fluctuations, however, is a potential benefit of a reverse mortgage. In fact, a paper written by The World Bank’s Finance, Competitiveness, and Innovation Global Practice believes that reverse mortgages can be a welfare-enhancing tool for retirees.
But Why Look Into Reverse Mortgages Now?
Simply put, age impacts borrowing limits. While you might not want a reverse mortgage today, understanding how your options change as you get older will better prepare you for a time when you might want one.
For example, you might want to learn about variations of the reverse mortgage, like a HECM for purchase— this makes it possible to move to a more retirement-suitable home while still leveraging the equity in the property. You’ll also better understand which mortgage features, such as lump-sum distributions, monthly distributions, or lines of credit, suit your lifestyle better.
As with all major financial decisions, talking to a loan professional could provide you with helpful information. We at Open Mortgage are of course here to answer your questions about reverse mortgages and to assist you in responsible home financing. You can browse our website to learn more and to speak with an experienced loan professional today.
- 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