A reverse mortgage can offer many benefits for eligible older homeowners, according to a recent USA Today article.
The home equity conversion mortgage (HECM) program offers a way to tap the home’s equity either through “a line of credit, a monthly payment called a tenure payment, and a source of cash if needed,” explains John Salter, an associate professor in the Department of Personal Financial Planning at Texas Tech University, in the article.
Setting up a HECM line of credit offers many benefits, Salter says, adding that it can serve as a source of emergency funding. In addition, the program is non-recourse.
Salter also discusses downsides of reverse mortgages, including that the mortgages aren’t necessarily free.
The bottom line, he says, is if the house is paid, and the borrower is financially comfortable, setting up the no-cost reverse mortgage is a logical choice.
“You may never need it, but it will be there if you do,” Salter says. “Just remember any funds borrowed is debt in your grand financial picture.”
Read the article here.
Written by Cassandra Dowell