Seniors researching their retirement options are likely to be introduced to the reverse mortgage loan as an option for supplementing their monthly cash flow. While accessing their home equity and eliminating monthly mortgage payments1 are some of the main benefits of the reverse mortgage, there is still so much to consider before deciding that it’s a good fit. So, when is taking out a reverse mortgage a good idea?
You or your spouse is at least
62 years old
Homeowners meet part of the minimum requirements for a reverse mortgage by being 62 years of age or older. If one of you happen to be under 62 you can still qualify as a non-borrowing spouse; however, the younger the age, the lower the amount you can borrow.
You don’t plan to move anytime
The up-front costs and application process for a reverse mortgage can be worth it to seniors who plan to retire in place. Also, if you are planning to buy a home soon you can choose to utilize a reverse mortgage to purchase your next home. By using a reverse mortgage for purchase, seniors can use the equity from the sale of their previous residence to fund the purchase of their next home in one transaction.
You can stay current on your
A reverse mortgage comes with some financial obligations that borrowers are required to maintain. If you’re able to continue making payments on property taxes and homeowner’s insurance while keeping up with necessary home maintenance, a reverse mortgage could be a viable option.
You want to consolidate your debt2
One of the main features of a reverse mortgage is the fact that it eliminates monthly mortgage payments.1 By removing what is likely one of the largest expenses for seniors, you can begin to focus on paying off or consolidating any additional debt you may have.
You would benefit from a growing
line of credit3
If you choose the line of credit disbursement option, any unused funds from a reverse mortgage will continue to add to the growing and untaxed line of credit. This gives seniors the freedom to access the funds in anticipation of costly expenses like medical care or planned household improvements.
Still considering a reverse mortgage to supplement your retirement funds? Call 800.976.6211 to speak with a licensed reverse mortgage specialist and receive a no-obligation loan estimate.
1Your current mortgage(s) and any other existing liens against the property must be paid off at or before closing. You must live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.
2Your HECM loan will accrue interest that together with principal will have to be repaid when the loan becomes due.
3 The reverse mortgage loan balance grows at the same rate as the available line of credit. Line of credit growth occurs and is only a benefit when a portion of the line of credit is not used. The unused line of credit grows over time and more funds become available during the life of the loan.