In the past, people often thought of reverse mortgages as a last resort option for those struggling financially. For many years, senior homeowners and financial planners wouldn’t consider a reverse mortgage as part of a retirement plan. However, times are changing. In recent years, more consumers, financial planners, and retirement advisors are looking at reverse mortgages as a solution. Reverse mortgages are even gaining interest among affluent homeowners who have invested and saved for retirement.
As Baby Boomers reach retirement age, more and more seniors are retiring without a pension and significant savings. Meanwhile, life expectancy is increasing making many seniors wonder if they saved enough money to last throughout their retirement. A reverse mortgage has been typically recommended for seniors who are ‘house rich and cash poor’ – in other words, homeowners who have more home equity than savings. Now, some financial planners and retirement advisors are also considering reverse mortgages for seniors who have saved plenty for retirement.1
Instead of a reverse mortgage used as a last resort, a reverse mortgage is becoming a pro-active strategy for affluent seniors to use as part of their retirement plan.2
Many seniors can benefit from a reverse mortgage. The old perception that reverse mortgages are only for seniors without savings is disappearing. Changes to the product and regulations over the years have made reverse mortgages more appealing to a broader audience. Affluent seniors and financial planners are taking a closer look at the benefits of a reverse mortgage. To learn more about how a reverse mortgage may fit in your retirement plan, try our reverse mortgage calculator or call 1 (800) 976-6211 to receive a personalized loan assessment from a licensed advisor.
1New Retirement. Reverse Mortgage Information: Why the Wealthy Should Use Reverse Mortgages (October 28, 2014) https://www.newretirement.com/retirement/reverse-mortgage-information-why-the-wealthy-should-use-reverse-mortgages/
2Reverse Mortgage Daily. Affluent Seniors Show Growing Interest in Reverse Mortgages (May 1, 2019) https://reversemortgagedaily.com/2019/05/01/affluent-seniors-show-growing-interest-in-reverse-mortgages/
3Your 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.
4The 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.