This Reverse Mortgage Guide Will Help You Plan For Retirement
This reverse mortgage guide will help you plan for retirement. But, first of all, what is a reverse mortgage? A reverse mortgage is a special type of home loan that allows borrowers who are at least 62 years old (and meet other eligibility requirements) to convert a portion of the equity in their homes into cash. You spent years putting money into your house and you have every right to it!
Reverse mortgages are not simply a last resort. It is a retirement income tool that can help your retirement income plan. Reverse mortgages can help avoid risk by providing an alternative source of retirement spending. If this money is used for well structured investments, you could put the money back into the house and pay off the mortgage.
A reverse mortgage pays the homeowner the equity which can be used to pay off the mortgage. Another way to use a reverse mortgage is to give your retirement funds a boost. By receiving some of the loan as a lump-sum will allow homeowners to invest the money, make a profit, then use the money to pay off the mortgage.
How do you know if a reverse mortgage is right for you? Check out this HECM guide from The Huffington Post:
|Financial Needs||HECM Draw That Meets Need|
|1. Need a reserve for contingencies, including the possibility of outliving your money by living too long||Draw the largest possible initial or future credit line, with or without a cash draw.|
|2. Inadequate income, now and in the foreseeable future||Draw the largest possible monthly payment for as long as you live in the house.|
|3. Have an immediate need for cash for any purpose except buying a house.||Draw as much cash as possible, at closing or after 12 months.|
|4. Need a reserve for contingencies and more current income||Draw a smaller monthly payment plus the largest possible credit line.|
|5. Purchase a house with the smallest possible cash outlay.||Draw as much cash as possible, at closing.|