Reverse mortgage loans allow borrowers access to their home equity to help fund some of their retirement needs. Borrowers may use a reverse mortgage loan to pay off their existing mortgage (a requirement of the loan) and eliminate monthly mortgage payments. Oftentimes, the boost in finances can be used by the borrower to make retirement savings last longer, to build a safety net for unplanned emergencies, to fund necessary home repairs, and to cover health care expenses. Reverse mortgage loans can also be used to buy a new property that better suits the needs of the borrower, for example: downsizing.
Notes About Reverse Mortgage Loans:
- Borrowers must be at least 62 years of age to qualify
- Loans have specific safeguards in place to protect borrowers
- Funds are dispersed at the borrowers’ discretion
- Reverse mortgage loans are insured by the Federal Housing Administration (FHA)
- Borrowers must continue to pay property taxes, homeowners insurance, and maintain the property.
Reverse mortgage loans were created 30 years ago to help Americans age 62 and older. These loans allow borrowers to convert a portion of their built-up home equity into tax-free money that can be used to improve and maintain their lifestyle as they progress into their golden years. Before applying for a reverse mortgage loan, we typically recommend that you consult with your experienced tax advisor to ensure that this program is right for you.
Leveraging Reverse Mortgage Loans For A Comfortable Retirement:
- Consider accessing your home’s equity as a monthly check. These funds can supplement your regular income rather than managing a lump sum.
- Hold off your Social Security benefits to allow your monthly benefit payment to grow.
- Use a reverse mortgage line of credit as protection should the market face unexpected downturns. Take proactive steps to protect yourself and your lifestyle.
- Ensure that money is available if and when you are faced with unexpected expenses by setting up a standby reverse mortgage line of credit.