Housing can often be one of the biggest retirement expenses — but it can also be one of the biggest retirement assets, especially when tapping into home equity through a reverse mortgage.
This strategy is one of six outlined in a recent U.S. News article, which explains a number of ways to pay less for housing in retirement.
“Retirees ages 62 and older can use a reverse mortgage to tap their home equity to pay for retirement expenses while remaining in the home as long as they live,” author Emily Brandon writes.
However, like other loans, reverse mortgages have a variety of fees associated with them, and become due when the borrower moves, sells the home or passes away.
While many people in the retirement and financial planning world have moved away from the term “last resort” as it relates to a reverse mortgage, Christopher Herbert, managing director of the Joint Center for Housing Studies at Harvard University, still suggests other options should be explored before committing to the loan.
“A reverse mortgage removes the obligation for monthly payments going forward, and under certain circumstances it might provide tremendous financial security, but it’s something that should be used as a last resort,” he told U.S. News.
Among the other strategies U.S. News suggests for bringing down housing costs during retirement are paying off your mortgage, downsizing, relocating, becoming a renter and sharing your living space.
Read the full article here.
Written by Emily Study