With reverse mortgage changes on the horizon, now may be the time for qualified applicants to take out a reverse mortgage even if they don’t need the money, writes financial columnist Jane Bryant Quinn.
“I’ve got a financial proposal that is probably going to surprise you,” Quinn writes. “Take out a reverse mortgage at age 62, even though you don’t need the money. In fact, take it especially if you don’t need the money. There will never be a better time.”
Describing a savings strategy utilizing the Home Equity Conversion Mortgage Saver with its credit line option, Quinn advocates taking out the loan now, while interest rates are low, and not withdrawing the borrowed amount upfront.
“But – and this is a big but – borrowers should not take out the full amount in cash,” she writes. “You’d be leaving nothing to help pay your bills in your older age. If you’re a spender, don’t take a HECM until your mid-70s or 80s…. If you won’t spend all the money now, a HECM credit line gives you tremendous financial flexibility. You owe interest only on the amount you actually borrow.”
Quinn also refutes one common argument against reverse mortgages: the upfront fees.
“As for the HECM’s upfront fees, I consider them worth it,” she says. They let you nail down a large pool of future borrowing power, at a time when inflation will have driven your expenses up.”
Written by Elizabeth Ecker