Saving enough for retirement can be a challenge. As people continue to live longer, retirement savings are being stretched further over many more years. However, there is an option that is increasing in popularity – a reverse mortgage.
All too often homeowners are not fully aware of all their financial options -- some have accumulated a lot of equity in their homes and may be house rich but cash poor. They consider downsizing their home and leaving the community they love in order to make ends meet.
In some cases, a reverse mortgage option might make sense. So, what is a reverse mortgage and how does it work? In a nutshell, it’s a loan secured against the value of your home. However, unlike a traditional first mortgage, a Home Equity Line of Credit (HELOC) or a second mortgage, you are not required to make monthly mortgage payments for as long as you live in your home. And, you will maintain ownership and control of your home.
The money you receive can be used in a variety of different ways, including:
- Eliminating debt repayments
- Increasing your monthly cash flow
- Helping a child or grandchild
- Early inheritance
- Unexpected health care costs
- Accessibility improvements
- Home repairs and improvements
- A dream vacation
Here are some of the myths:
Myth: The bank owns the home.
Fact: You always maintain title ownership and control of your home, and you have the freedom to decide when and if you’d like to move or sell.
Myth: A reverse mortgage is a solution of last resort.
Fact: Some financial professionals recommend a reverse mortgage because it’s a great way to provide financial flexibility. Since it’s tax-free money, it allows retirement savings to last longer.
Myth: You cannot get a reverse mortgage if you have an existing mortgage.
Fact: Some homeowners use a reverse mortgage to pay off their existing mortgage and other debts, freeing up cash flow for you to use as you wish.
There are no income requirements. A credit check is required but there are no minimum credit standards. There are guidelines and criteria that have to be met and it may not be the solution for everyone but it is an option for consideration.
Need more information?
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