Retirement Travel can Start with a Reverse Mortgage
While leisure travel is on hold for most of us, that’s not likely to be the case forever. As restrictions ease and confidence in our ability to do so safely returns, there will likely be a growing demand to make up for lost time. In particular, retirees may see the end of this pandemic as a reason to spend more exploring beyond the borders of their neighborhoods.
If your retirement dream has shifted to include traveling the country, exploring the world, or just getting out of your town a little more often, the home you have now could be your key to a new life on the go.
Financing a more mobile lifestyle at this late stage and on a fixed income may seem unlikely, but homeowners have a unique option. The Home Equity Conversion Mortgage (HECM) or reverse mortgage offers those 62 and older the opportunity to borrow against their home’s equity and defer the loan’s repayment for as long as they remain in the house.
The added flexibility of this cash, available as a lump sum payment or as regular payments over time, can allow you to re-prioritize your retirement plans. You can use the funds to increase your budget, or simply establish access to them to avoid ill-timed withdrawals from other investments. In either case, it can make crossing those expensive global destinations off your bucket list a more comfortable adventure to consider pursuing.
Many retirees also decide a more permanent change of scenery is right for them. The access to current equity without an immediate repayment can be the retirement boost needed to make a vacation home possible. Just be sure you will still be meeting the residency requirements that come with a reverse mortgage, and speak to a financial professional to discuss how splitting your time between locations can impact your tax obligations.
Similarly, if travel is expected to be a substantial part of your future, it could be time to consider downsizing to a more efficient home. A HECM for Purchase can combine a reverse mortgage and home purchase into a single transaction, limiting your closing costs. You’ll enjoy the advantages of your hard-earned equity and a better-suited home, exactly where you want it to be.
For the ultimate in travel freedom, but at a slower pace, many retirees opt to add a recreational vehicle to their retirement plans. With options to fit nearly every budget, it can be a long-term plan to explore the country or a hands-on method to find the best locale for a more permanent residence. And again, the versatility of a reverse mortgage can help you get behind the wheel.
Make sure your retirement is headed in the right direction by exploring your reverse mortgage options with the experts from Open Mortgage. Explore our website for more information or to start a conversation about your lending opportunities.
- 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