The Consumer Financial Protection Bureau (CFPB) recently released a purely negative report that degraded the use of reverse mortgages. However, there are actually many benefits of a reverse mortgage.
First off, in order to qualify for a reverse mortgage, you must own and reside in your home and be a senior 62 years of age or older. (In most cases second homes, apartment buildings and homes less than a year old are not eligible for a reverse mortgage.)
Reverse mortgages must be considered with all other options like selling the home, downsizing, or moving to an assisted living facility. These types of loans are long term decisions because there are insurance fees and mortgage interest that gets added to the loan balance every month. So someone that plans on selling in 5 years will have less equity.
For anyone who chooses to participate in a reverse mortgage program, they can take their money in regular payments for a fixed term, a line of credit, or select some combination of these choices by receiving the entire amount in a lump sum.
These special types of loans might be good options for homeowners that still have a mortgage, credit card debt, or need to make necessary repairs to their home. And with any financial decision, it is important to talk with trusted financial advisors to help make your decision.
The bottom line is this: reverse mortgages may not work for everyone but dismissing the service completely might prove to doom many households to poverty in old age.
Visit newretirement.com for a number of free services:
- Continue here to find a prescreened reverse mortgage lender
- Use our free Newretirement Retirement Calculator to plan for a safe retirement
- Use our free Reverse Mortgage Calculator to see how much you qualify for
- Use our free Social Security Calculator to find out when is the best time to take your benefits
- Click here to be matched up with a financial advisor to help you plan for a safe retirement