Reverse Mortgage Facts

As we age, many of us start to worry about how we will be able to afford the things we need in retirement. For some seniors, a reverse mortgage can be a smart financial move that provides a steady income stream that can help cover expenses. If you're considering a reverse mortgage for yourself or a loved one, there are several things you should know.

First, it's important to understand what a reverse mortgage is. A reverse mortgage is a loan that allows homeowners aged 62 or older to convert a portion of their home equity into cash. The loan is repaid when the borrower sells the home, moves out permanently, or passes away. Unlike a traditional mortgage, the homeowner does not make monthly payments on the loan. Instead, the loan balance increases over time as interest accrues.

So what are some of the positive reasons that someone would choose to get a reverse mortgage? Here are just a few:

1. Supplement Retirement Income: Many retirees find that their retirement income is not enough to cover all their expenses. A reverse mortgage can provide a steady stream of income that can help cover those gaps and provide financial peace of mind.

2. Pay Off Debt: If you have high-interest debt, a reverse mortgage can be used to pay it off. This can help lower your monthly expenses and reduce financial stress.

3. Home Improvements: If you need to make home repairs or renovations, a reverse mortgage can provide the funds you need to get the job done.

4. Medical Expenses: As we age, medical expenses can become a significant burden. A reverse mortgage can be used to cover these expenses and help ensure you receive the care you need.

5. Delay Social Security: If you're not yet ready to start collecting Social Security, a reverse mortgage can help bridge the gap. By using the funds from your reverse mortgage to cover expenses, you can delay taking Social Security and increase your monthly benefit.

While there are many positive reasons to consider a reverse mortgage, it's important to understand that there are also risks involved. The loan balance increases over time, which means that the equity in your home is decreasing. If you want to leave your home to your heirs, they may need to repay the loan in order to keep the property.

Overall, a reverse mortgage can be a smart financial decision for seniors who want to supplement their retirement income, pay off debt, make home improvements, or cover medical expenses. If you're considering a reverse mortgage, it's important to do your research and work with an experienced financial advisor who can help you make the best decision for your unique situation.