The main purpose of reverse mortgages was to aid seniors in fulfilling their financial needs by allowing them to use their home equity. Nowadays, however, many seniors are realizing that they could use their reverse mortgages as practical financial planning tools.
Here are some ways reverse mortgages could be used in retirement planning:
- Delaying your pension and Social Security payouts – Some seniors might need to get payouts from their pensions and Social Security once they’re available. But with money from a reverse mortgage, your finances might be healthy enough that you could wait to get those payouts, increasing your payouts should you need them in the future.
- No monthly home loan payments, which means an increase in your cash flow – Because your current home loan would be paid off by a reverse mortgage, you’d be left with extra cash that would’ve typically gone to your monthly mortgage payments.
- Postpone withdrawing your retirement assets – Since you could use your reverse mortgage for your cash needs, you won’t have to touch your retirement assets; therefore, giving them more time to grow.
- Gain access to a growing, yet affordable line of credit – Because the line of credit that comes with a reverse mortgage grows over time, you’ll be able to withdraw an even bigger amount when you need it.
- Obtain annuity-style payments using the equity in your home – This is ideal for individuals who prefer to plan their income as a consistent cash flow, explains one of the top reverse mortgage brokers in Utah. Even Primary Residential Mortgage, Inc. agrees that this type of loan is highly beneficial to borrowers.
- Replacing your cash reserves – Not all people have ample cash reserves. With a reverse mortgage, you’ll have the opportunity to catch up and replenish your cash reserves.
With proper planning and the right financial tools in place, you could rest easy knowing that you’ve got everything covered once you retire. Consult an experienced broker to determine your eligibility for a reverse mortgage and how much you could qualify for.