3 ways a reverse mortgage can enhance retirement!
There is a misconception that reverse mortgages are only beneficial to those with a lot of equity but no cash. The truth is, reverse mortgages can be beneficial for a variety of people. Recent modifications by the Federal Housing Administration (FHA) have highlighted the potential financial planning advantages for those with more financial wiggle room, too.
With the benefits for reverse mortgages widening, let’s take a closer look at three situations where a reverse mortgage could be the right plan for you!
1. Reverse mortgage for immediate NEED
Generally, traditional HECM borrowers have equity built up in their home, but may not have a steady source of cash flow, and they need money now. In many cases, loan officers can help. For example, if you need in-home care, you can use the monthly payments generated by home equity conversion to help when you or your heirs are unable or unwilling to pay for these expenses.*
Many people assume that the need for money is the ONLY reason to get a reverse mortgage. However, a reverse mortgage can actually be beneficial for a variety of homeowners.
*Should not be construed as legal or financial advice. Please consult a tax professional/financial advisor.
2. Reverse mortgage to enhance LIFESTYLE
Because reverse mortgages do not require monthly principal and interest mortgage payments*, obtaining one can potentially help with cash flow. But there are many other lifestyle advantages.
Tenure payments are a form of monthly draw. Tenure means permanent, and these monthly payments will continue as long as you occupy the home. This can be a great way to improve the quality of life if you are on a fixed income. Others can enhance their lifestyles by accessing home equity to pay for home upgrades, travel or new vehicles.
*Qualification is required. Borrower is required to pay all property charges including, but not limited to, property taxes, insurance and maintenance.
3. Reverse mortgage as part of a comprehensive financial PLAN
Reverse mortgages are even being recommended for people who do not have an immediate need for them. Why? Because many homeowners hold disproportionate amounts of their retirement savings in real estate. Drawing part of your monthly cash flow from your home equity can help your traditional retirement funds last much longer.
The primary financial planning advantage, however, is the line of credit (LOC). This option allows you to have an emergency fund that grows at current interest rates and is easily converted to monthly cash flow later in retirement. Because the LOC experiences compounding growth, many homeowners will opt in as early as possible (age 62) and draw their increased funds at a later date as a form of retirement cash flow that can potentially not be taxed as income*.
*Should not be construed as legal or financial advice. Please consult a tax professional/financial advisor.
Is a reverse mortgage what you’ve been looking for?
Remember, a reverse mortgage isn’t only for one type of homeowner; it might be right for your situation, too! If you want to learn more or have any questions, contact a Movement Mortgage loan officer near you today!
*This material has not been reviewed, approved, or issued by HUD, FHA, or any government agency.
