Is A Reverse Mortgage Right For You?
Updated for January, 2022
If you plan on remaining in your home after retirement, a reverse mortgage is another financial resource you may wish to become familiar with. Essentially, a reverse mortgage is a line of home equity that most homeowners age 62 and older are eligible for. Rather than taking out a loan to cover certain expenses after retirement, you can draw on your home’s equity. A reverse mortgage can provide you with additional income when needed, and you’re not required to pay back the money borrowed until your home is sold or otherwise vacated.
On the other hand, you will need to remain up-to-date on all your home’s property tax payments, insurance, and HOA dues (if applicable) in order to qualify. Other options worth considering in lieu of a reverse mortgage include home equity loans and lines of credit.
The Pros & Cons of Reverse Mortgages
Is a Reverse Mortgage Right for You?
Typically, a reverse mortgage is a viable option when you have a large expense to cover and do not want to go through the hassle of taking out a private loan. For instance, many will use funds from a reverse mortgage to cover medical expenses. Some choose a reverse mortgage to simply boost their monthly income. It is typically a smart choice for those who plan on remaining in their home for a long time to come. However, a reverse mortgage is generally not the best choice if you plan on moving soon, or if you can’t currently keep up with the costs associated with owning your home.
Many will use funds from a reverse mortgage to cover medical expenses.
If you decide to go through with a reverse mortgage, be aware that you will be required to receive financial counseling (at no cost to you) through a third-party, such as AARP or a national counseling agency. You will also need to own your home outright (or have a low mortgage balance) in order to be eligible.
Overall, a reverse mortgage can be a great way f you have any questions about whether or not a reverse mortgage is a good choice for you, it’s in your best interest to speak with a financial advisor.
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