In yet another nod from the financial planning community, reverse mortgages have garnered some more attention for how they can provide a “critical” supplement to retirement income, according to a recent article from PlanAdviser.
Though acknowledging that reverse mortgages are not for everyone, PlanAdviser notes that in certain scenarios, depending on suitability, reverse mortgages can give borrowers an “enhanced quality of life in retirement,” provided the loan is executed under the right circumstances, the borrowers stay healthy and remain in the house for a long time.
“A reverse mortgage makes sense for someone looking to leverage home equity for income in retirement,” said Steve Sass, program director at the Center for Retirement Research at Boston College, in the article. “Your home is typically your largest expense and asset. So if you need more income, a reverse mortgage is the place to look.”
But even considering the benefits of reverse mortgages, borrowers should be forewarned of potential scams and take the time to seek out the proper education to learn more about the loans, their requirements and associated costs.
“You need to understand the benefits and alternatives of the loan, as well as how to avoid scammers,” said Sass. “All of a sudden you have a lot of cash and there are scammers that want to sell to you. Not all retirees are as careful and as savvy as they should be.”
Read more at PlanAdviser.
Written by Jason Oliva