Probably the most common way to utilize a reverse mortgage is to pay off some existing debt or a mortgage while supplementing your retirement income but there are many other ways that a reverse mortgage can be used to assist you financially.
You may not be sure how a reverse mortgage could assist you but here’s some different financial ways you might use one. The funds do not necessarily have to be used by the homeowner but could be used to assist a family member.
- Help Family With a Home Purchase – Parents assisting their children with down payment funds to purchase a home has become very common given some of our hot and expensive housing markets. With a reverse mortgage you could access the equity in your home to provide the down payment funds without having to tap into any savings or investments that you have set aside.
- Eliminate Your Current Mortgage Payments – If there is sufficient equity in your home, the funds from a reverse mortgage can be used to pay off your current mortgage and free up monthly cash flow. This could prevent you from having to downsize in retirement and leaves you a possible option of staying in your current home.
- Purchase a Home – A reverse mortgage can be used the same way as a regular mortgage to purchase a home. You must have a minimum 45% down payment as the maximum amount available is 55% of the home’s appraised value based on your age, type and location of the property.
- See the World – Have you always dreamed of travelling when you retired but you haven’t been able to set aside sufficient savings to do that? If you have untapped equity in your home than a reverse mortgage could be the way to realize your retirement dreams of travelling.
- Renovate Your Home – As we age mobility and safety issues in the home can become a concern. Funds from a reverse mortgage can make the necessary changes to ensure that your home is safe so you can remain in your own home safely.
- Cover Monthly Expenses – If your retirement income isn’t sufficient to cover your monthly expenses then a reverse mortgage can assist in supplementing your current pension income without any tax consequences and with no negative consequences to your current income.
Reverse mortgages can be used in many ways including eliminating financial hardship, to pay off high interest credit card debt, provide funds for medical emergencies, supplement pension income, or assist you with a comfortable retirement.
If you have questions about whether a reverse mortgage is or isn’t the right choice for you please give me a call and we will reviews all of the potential options available that might assist with your personal circumstances.