Some senior homeowners feel like a loser or ‘less than’ when they get a reverse mortgage. Nothing could be further from the truth! These folks are actually winners! Why is that?
They are putting themselves in a better position financially by either:
- Eliminating their mandatory, monthly mortgage payment
- Unlocking access to their home equity Tax-Free
- Earning compound interest on a portion of their home equity
- Or increasing their purchasing power when financing a new home
None of us knows what life will bring. We do know that the future is uncertain. For example, how long will we live? What will be the qualify of our lives? Will healthcare costs, inflation, or taxes increase? Do we have enough resources to not outlive our money?
When Senior Homeowners tap into their home equity, it gives them another source of cash flow to access. When they start receiving proceeds via a lump sum, monthly payments or a line of credit, that money isn’t taxed.
Of course, the homeowner needs to live in the home at least 6 months a year as their primary residence, pay the property taxes, homeowners insurance, and any other fees related to the home (i.e. HOA or flood insurance) on time, and maintain the home. If they do this, they can remain in the home until age 150 of the youngest borrower.
Forgive the cliche, but life is a marathon not a sprint. The savvy homeowners who have been diligent and disciplined with their finances, generally are excellent candidates for the reverse mortgage loan program. They’ve run hard and steady and, in my opinion, have earned the reward of eliminating their mortgage payment. It’s a smart decision in retirement.
Reverse Mortgages are for winners!