Outlining a reverse mortgage scenario in which a couple uses a reverse mortgage in order to buy a second home, columnist Tom Kelly shows the merits of using a reverse mortgage to purchase a new retirement home, rather than the traditional “age in place” use of the loan.
“While the proceeds of a reverse mortgage typically help seniors to “age in place” by making their home more comfortable for their retirement years, there are no limitations on how reverse funds can be used,” Kelly writes in a Spokesman-Review column this week.
Kelly details a scenario in which a couple owns a home, then gets a reverse mortgage to reduce monthly expenses and free up cash to purchase a second home.
He highlights the benefits of the loan, including the borrower’s ability to “outlive” the home without being forced to move.
“The homeowner cannot be displaced and forced to sell the home to pay off the mortgage, even if the principal balance grows to exceed the value of the property. If the value of the house exceeds what is owed at the time of homeowner’s death, the rest goes to the estate,” he writes.
Further, there are new non-borrowing spouse protections in place that aim to prevent a borrower from losing his or her home if the name is not on the home title and the borrowing spouse passes away.
Written by Elizabeth Ecker