Reverse Mortgage Surprise: You Can Use Your Home to Stay at Home or Get Out of the House
Maybe you’ve seen those reverse mortgage commercials on TV. In 30 or 60 seconds, it can be difficult to grasp what a reverse mortgage can do for you. But here is the basic idea: With a reverse mortgage, seniors age 62+ can use their home equity (the difference between your home’s market value and the amount you still owe on any mortgage or equity loan) to pay for other financial obligations or plans. Unlike a Home Equity Line of Credit (HELOC), a reverse mortgage typically defers payment to the lender until such time as you sell your home. (Homeowners are still responsible for paying property taxes, insurance, and maintenance.) When you do sell, your reverse mortgage lender is paid back as your home equity is reduced by the amount of the reverse mortgage plus any fees or interest.
There can be certain limitations (check with your lender), but did you know you can typically use the money from a reverse mortgage to get out of the house AND stay in your home? Here’s what I mean:
Get Out of the House
Many empty nesters find unappealing the prospect of only collecting on their home equity after they are no longer physically able to enjoy what the money can buy. To the contrary, seniors who seek to remain active in their retirement years might want to travel. For those Baby Boomers, I’ve got great news! Money from a reverse mortgage could go toward financing close-to-home activities or even that dream vacation! What do you want to see? Where do you want to go? Depending on the amount of money at your disposal, the sky’s the limit.
Stay In Your Home
According to the Central Indiana Council on Aging (CICOA), “nearly 90 percent of people age 65 and older ... want to remain in their current home for the rest of their lives.” A reverse mortgage can help make this possible even as physical accommodation needs change. How? According to this official publication from the National Council on Aging (NCOA), titled Use Your Home to Stay at Home, “you can use the … money for any purpose you choose, including living expenses, home repairs and modifications … and … home care expenses.” These can help you stay in your home longer as you enjoy an active, home-based retirement. For example, you could choose to use money from your reverse mortgage to pay for senior accessibility home modifications.
But don’t forget that, according to the NCOA publication, “You can even use a reverse mortgage to purchase a new home, which might help you downsize to a house that suits you better or is closer to family.” So, whether you stay in your current home or choose a home better suited to your needs, a reverse mortgage can help make this possible.
The bottom line is that a reverse mortgage is designed to help you be able to handle senior financial plans and obligations. Whether that means getting out of the house or using the money to stay in your home as you age in place, a reverse mortgage could be worth checking into.
To learn more about reverse mortgages or your alternatives for active, home-based retirement living, contact me at 317.442.4797.