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A Reverse Mortgage: Is It Right For You?

 
If you’re a senior who’s considering a reverse mortgage you’re not alone.  Of course there are advantages and disadvantages to this flexible loan and determining whether or not it’s right for you calls for the assessment of a number of factors.

What is a Reverse Mortgage?

A reverse mortgage is a secured loan on your property, be it a house, townhouse, semi-detached, condominium or cottage.  Although the loan does accumulate interest, it requires no payments.  There are limits set in place to govern the maximum amount that can be borrowed as well as the ratio of the borrowed dollar amount compared to the equity in your property.  The concept behind the reverse mortgage is to provide seniors with a viable way to increase their disposable income after retirement.  At a time when cash flow is low, the reverse mortgage offers an opportunity for post-retirement living in full comfort.

When is the Reverse Mortgage Loan Paid Back?

Since the reverse mortgage loan is secured by the equity in your property, the institutions that provide it ask that it be repaid only once the property is sold or vacated.  This allows for full flexibility and a style of living unburdened by monthly loan payments.

Your Idea of the Perfect Retirement

If you’re a senior who sees yourself booking vacations, buying the things you never did while you were working and living comfortably without worrying about debt then the reverse mortgage may just be the perfect solution for you.  Particularly if you find that your savings, pensions or after-work income is not enough to satisfy your desires, the reverse mortgage can provide you with the additional money you need, to live the way you want.
On the other hand, if you wish to leave your family with a significant inheritance when you pass it is quite possible that this inheritance lies in the value of your property and its assets.  If you are able to live within your means with the income you already have in your retirement and your family’s inheritance is more important to you, a reverse mortgage would only unnecessarily deplete your estate

Supplementing Your Income

If you’re one of the many seniors whose retirement fund was crushed in the stock market in recent years, then you may have no choice but to supplement your income in some way.  The reverse mortgage allows you to do just that, without the added stress of paying for a new loan every month. 

Reverse Mortgage as a Retirement Planning Tool

When you crunch the numbers you may find that pulling your money out of investments costs more than arranging a reverse mortgage on your home.  Be sure to do your due diligence, look into all of the costs associated with reverse mortgages and weigh this option against others.  Perhaps you want to fund your retirement by combining a withdrawal from your investments with a small reverse mortgage on your home. 
Consider the pros and cons and evaluate your retirement plan.  If you’re interested in learning more about reverse mortgages from a professional, contact a reverse mortgage brokerage or reverse mortgage agent in your area.
 

 

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