Using a Reverse Mortgage for Your Retirement Plans

Have you considered using a reverse mortgage as part of your retirement plan? Financial planners are now looking into the idea of using a reverse mortgage as a way to help those who are approaching retirement to reach their financial goals. While a reverse mortgage is not for everyone, it is definitely an option available to those who qualify and see it as a viable resource for their retirement planning strategy.

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If you are approaching retirement and you are at least 62 years old, you could definitely look into applying for a reverse mortgage to help you reach your goals, whether it is to take a trip or to help supplement your retirement income. One of the most important things to do when reviewing the option of applying for a reverse mortgage to help with your retirement planning is to be able to understand the terms of the loan. You can discuss different options with your financial advisor, and prior to applying for a loan, borrowers must speak with a reverse mortgage counselor to make sure that you are familiar with the program.

You should know that reverse mortgages will not affect your Social Security or Medicare benefits. Some retirees turn to reverse mortgages to supplement their Social Security and pension benefits. Retirees can also use their reverse mortgage loan to help withhold their Social Security payments, as they can qualify for more as at an older age. However, be aware that Medicaid and other benefits may be affected, so please discuss with your financial advisor if you have any concerns.

Because you could spend your reverse mortgage funds in any way that you choose, many borrowers use it for things such as renovating a home, buying a new, reliable car for their retirement year, or to help pay for things such as medical expenses and long term care insurance. You are not required to make monthly payments to the lender, as long as you continue to live in the home as your permanent residence. Because there is no maturity date for the loan, you should be aware when the loan repayments take into affect. The loan can become due when any of the following actions takes place:

1. The last borrower on the loan leaves the home permanently (through death or otherwise).

2. The borrower is no longer keeping up with their payments for taxes and insurance.

3. The home is no longer being taken care of.

Some retirees worry about not being able to leave equity or not being able to pass the property on to their kids or heirs. If that is your concern, discuss the pros and cons of getting a reverse mortgage with your children and/or heirs. Fortunately, you do not need to worry about your heirs or children inheriting your loan. For the loan to become satisfied after death or leaving the home permanently, the home could be returned to the lender or sold. If you or your heirs choose to sell the home, the remaining balance could be given to the heirs. Another option is that if your heirs wants to keep the home, they can pay off the loan or work with the lender to refinance the loan. (Read more here about your heirs’ options with your reverse mortgage.)

To qualify for a reverse mortgage, you must be at least 62 years or older, you must own your home outright (or be able to pay it with the reverse mortgage funds) and have substantial equity in the home.

Speak with your financial advisor to determine what is the best way to achieve your retirement goals.

To learn more about reverse mortgages and how it can help you, call 1-888-808-8486.

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