Six Situations Where a Reverse Mortgage Could be Ideal
Reverse mortgages let seniors aged 62-and-older convert part of their home equity (wealth) into cash, a monthly check, or a line of credit. While reverse mortgages aren’t meant for all seniors, here are six situations they can be ideal:
You love your home and don’t want to move
If you take out a reverse mortgage, you keep home ownership and can stay in the house for as long as you live. Keeping home ownership means maintaining your home and continuing to pay property taxes, insurance and HOA fees. Reverse mortgages don’t need to be repaid until you pass away or move out of the home.
You want to move
Been thinking about moving to a warmer climate? Or wanting a house more suited to retirement living? The HECM for Purchase (H4P) lets you purchase a new home using a reverse mortgage combined with a down payment. This can increase your home-purchasing power and provide home options previously unavailable to you.
You have extensive home repairs or renovations
Home repairs are an expensive fact of life. If your home has issues such as a leaking roof or a failing heating system, a reverse mortgage can provide the funds to correct these issues (if your homeowners’ insurance doesn’t cover the repairs). Or if you’ve been wanting to complete a special home renovation project, taking out a reverse mortgage can provide the opportunity you’ve been waiting for.
You need a ‘rainy day’ fund
Even with the best plans and preparation, you sometimes need extra money. This could be from health emergencies, car repairs, or investments declining in value. A reverse mortgage can help give you the additional cash you need without affecting your financial stability.
You want to live a more active lifestyle
One of the best parts of retirement is the opportunity to do things you’ve always wanted, like visiting Europe or taking up golf. A reverse mortgage can help fund an active lifestyle while preventing you from depleting your retirement savings.
Two advantages of reverse mortgages are not having a monthly mortgage payment*, and the ability to access some of your home equity. This can help you achieve things you want and give you a financial nest egg.
For more information on reverse mortgages, contact one of Open Mortgage’s friendly loan originators.
*Must maintain property as primary residence and keep property taxes, insurance and HOA dues current.
Things to know about Reverse Mortgages:
- 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