According to a study published by the Transamerica Center for Retirement Studies, 41% of retirees fear they will outlive their savings and investments. A reverse mortgage may be the answer to financial stability for homeowners 62 or older that own their home outright or have a significant amount of equity in the property.
Like a traditional mortgage, a reverse mortgage is a lien against your home. However, instead of making regular mortgage payments, you receive monthly payments or a lump-sum from the equity.
Here are 5 reasons retirees should think about choosing a Reverse Mortgage:
A reverse mortgage gives you an additional source of money.
A reverse mortgage can help you avoid depleting your nest egg. Regular payments from your home equity can provide another steady source of cash that you can use for bills instead.
If you’re postponing retirement due to a lack of savings, a reverse mortgage can be the financial cushion that allows you to retire now when you’re able to enjoy it.
A reverse mortgage can help you cover big leisure purchases.
You can choose to receive a lump-sum payment from your home equity instead of monthly payments. A large lump-sum from the reverse mortgage can make major purchases in retirement like a vacation home, boat, or world-wide cruise possible.
A reverse mortgage can pay your medical bills.
Declining health that requires long-term care is another great fear for retirees. Ultimately, both routine health care and long-term health care in the golden years are unavoidable costs. If health care expenses for you or your spouse become unmanageable, a reverse mortgage can get you the cash you need.
A reverse mortgage will get rid of your monthly mortgage payments.
Instead of making payments, you receive payments. So, homeowners with a reverse mortgage won’t have to worry about mortgage payments exhausting their savings. If you can no longer afford your mortgage payment in retirement, a reverse mortgage could be the answer to keeping your family home.
A reverse mortgage can help you make improvements to your home.
Finally, if you want to renovate your house, the home equity you obtain from a reverse mortgage can foot the bill. There would be no need to dip into your savings to make home upgrades. Cash from a reverse mortgage can also pay for routine home maintenance.
Is a reverse mortgage too good to be true?
The reverse mortgage has no catch. It’s a mortgage specifically for homeowners 62 or older. Its purpose is to give retirees access to cash from their home equity during retirement when they need it.
The cash payments or lump-sum you receive is tax-free. The reverse mortgage loan is only due when you pass away or move out of the home. You can pay back the loan with the proceeds of your home sale.