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Transitioning into a comfortable retirement typically requires hard work, careful planning, and the ability to reconcile your financial health with long-held aspirations. However, if retirement is nearing and the resulting fixed income threatens to derail the lifestyle you imagined, an underutilized and often misunderstood tool could get you back on track.

Add Income, Reduce Costs

A Home Equity Conversion Mortgage (HECM), often referred to as a reverse mortgage, can provide a route to more monthly cash flow and fewer expenses when it matters most. While some retirees may dismiss the idea without fully exploring it, changes to the product over the years have made it an option worth discussing with your financial advisor.

For starters, refinancing a traditional mortgage into a reverse mortgage, after the qualifying age of 62, can eliminate your monthly mortgage payment* and allow you to supplement income from the equity in your home. The combined benefit of eliminating a monthly bill and tapping into a new revenue stream could be just the boost your retirement plan needs.

Protect Your Investments

If added income is not the priority for you in retirement, a HECM could still play a critical role in optimizing your investments. Refinancing with a reverse mortgage offers access to your home’s equity on demand and can protect your nest egg in the event of an economic downturn. Drawing funds from a reverse mortgage instead of your retirement portfolio can buy time for the market to recover and avoid realizing immediate losses.

A Secure Option

Of course, one of the most significant benefits of converting your current mortgage to a HECM is that you can remain in the home for as long as your health allows*. Aging in place is among one of the top priorities for retirees, and the ability to supplement retirement income or savings without sacrificing a beloved home can place that desire within reach.

Once you are no longer living in the home, any loan balance remaining will need to be repaid, but as a government-insured loan, you won’t have to worry that you, or your heirs, will have to pay a debt that exceeds the value of the home at that time.

Curious about the reverse mortgage options available to integrate into your retirement strategy? Contact your local Open Mortgage loan originator today to begin your refinance journey.

*Things to know about Reverse Mortgages:
  • The home must be the primary residence of a borrower
  • 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
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