There are many reasons why a retired homeowner would consider taking a reverse mortgage. Some people use a reverse mortgage as part of a financial plan, while others use it in the case of an emergency. There are very few restrictions on what the funds from a reverse mortgage can be used for, although, you need to be able to pay your property taxes and home upkeep apart from the funds. Overall, your funds are available to you as your own money, to do with whatever meets you need.
As with any financial solution, it is important to talk to a professional to make sure you qualify and that it makes sense for you. Home equity is a valuable financial tool for those looking at retirement fund options. This list of 11 ways you can use your reverse mortgage funds, demonstrates some of the ways we have seen others use them.
1. Pay Off Your Mortgage Completely
Free up your budget by using the equity in your home to pay off the balance by using a reverse mortgage.
2. Buy Long Term Care Insurance
Put the equity to use by paying a Long Term Care policy to cover your medical expenses, or pay medical care premiums or out of pocket costs. The funds can be used to pay Medicare costs.
3. Delay Your Social Security Payments
Use home equity as income to allow your social security to grow.
4. Replace Your Salary
Reverse mortgage funds can create an income to replace your or your spouse’s salary in a tax free way.
5. Use it as Income During a Lapse in Work
Regardless of what causes the lapse in work- an injury, required care of a loved one, a relocation- your reverse mortgage funds can support you financially, even for a set interval.
6. Buy a New Home
Downsizing? Use the funds of your sold property to purchase a home with a 50% down payment and become mortgage free with a reverse mortgage.
7. Modify Your Home for Better Access
Many people are looking at changing their home to make it more assessable. Use your reverse mortgage funds to convert your home for aging and/or disability needs, or even for structure or aesthetics. Update your kitchen, bath or even outdoor space.
8. Use it to Not Outlive Your Retirement Income
As part of a comprehensive financial plan, a reverse mortgage can be used to extend the life of retirement funds.
9. Help Your Kids
Use your funds for grandchild college funds, to help your kids with a family vacation or as a gift.
10. Bridge the Social Security Gap
Use the income to close the gap between retirement and when Medicare will take place.
11. To Pay for an Emergency
Use home equity in the case of an emergency such as an accident or unexpected illness.
Your reverse mortgage funds can be used in the way that is right for you, and there are lots of options when you tap into the equity you have built into your home. Ask yourself how your equity can work for you during your retirement and call to discuss the costs and real life examples that Kevin has experienced in the last decade. As a reverse mortgage specialist, based locally in Colorado Springs, Kevin wants to help you make the best mortgage decision for you.