Some people think that a reverse mortgage was designed to help senior homeowners who are “house rich and cash poor.” A reverse mortgage is really designed to improve the financial security of senior homeowners. These are four ways a reverse mortgage can help make your life better:
1. Retire Early
Think of how great life could be if you had fewer bills or none at all. Using the proceeds from a reverse mortgage to pay off your existing mortgage or other debt can relieve you from financial pressures and may allow you to retire early to spend more time doing the things you love most.
2. Extend the life of your retirement savings
Paying off an existing mortgage or other debt using the proceeds from a reverse mortgage can free up disposable cash. This will allow you to extend the life or your retirement savings and live a more comfortable retirement by increasing your cash flow.
3. Improve your financial security
One of the overlooked benefits of a reverse mortgage is the line of credit. A reverse mortgage line of credit has a protective hedge against the value of your home, meaning your borrowing capability grows regardless of the price of your home.
Even if the value of your home drops, the ability to keep generating retirement income for as long as you have available funds in your line of credit1 will improve your financial security when the economy is down. Plus, unlike a traditional Home Equity Line of Credit (“HELOC”) a reverse mortgage line of credit cannot be cancelled or modified by the lender2
4. Experience less financial anxiety
If you get into financial hot water, you could lie awake worrying about late payments, a damaged credit score, or collection calls. A reverse mortgage used responsibly can increase your cash flow, allowing you to enjoy better financial security.
A Reverse Mortgage may be an option for converting your home equity into the funds you need. Try our reverse mortgage calculator above to receive a quick estimate of how much you may be eligible to receive.
1 The available funds in a line of credit will grow at the same rate as the loan balance.
2 The loan must be in good standing. You must live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to Federal Housing Administration (FHA) requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.