Equities.com: Reverse Mortgages Offer Versatile Retirement Solution

When it comes to accessing home equity, which is often retirees’ biggest asset, a reverse mortgage can be a versatile solution to increase cash flow and supplement income, says a recent article from Equities.com.

The article outlines several pros and cons of getting a reverse mortgage, conveying a theme that these loans are anything but a one-size-fits-all solution to retirement funding. It also offers two other alternatives, other than reverse mortgages, for retirees who want to access their home equity: sell the home or assume a second mortgage.

“For many senior homeowners who want to age in their homes and who do not want to get locked into paying monthly mortgage payments again, the third option [a reverse mortgage] has proven to be noticeably popular,” writes Equities.com.

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Breaking down the perceived advantages and disadvantages of reverse mortgages, the pros largely outnumber the cons listed. 

Aging in place while accessing a portion of home equity as cash, non-recourse features and freedom to use proceeds however the borrower wants, among other factors, tallied up the pros section. 

“With features that allow you to defer repayment, it is a versatile solution to increase your monthly cash flow and supplement your Social Security income and pension—all with the protection of federal insurance,” the article states.  

On the other hand, the cons side comprised of details regarding primary residence requirements, the responsibility of heirs who want to keep the home when the reverse mortgage becomes due, the potential of needing set-aside funds under the Financial Assessment, and having a lien placed on the home until the loan is repaid.

“For the past half-century, senior homeowners have been utilizing this option to access their equity and achieve the type of retirement they always wanted,” writes Equities.com. “However, when considering the reverse mortgage loan, or any financial product for that matter, it is always a good idea to educate yourself on the pros and cons.”

Knowing both the advantages and disadvantages, the article states, can help prospective borrowers determine if a reverse mortgage will be a good fit for their needs.

Read the Equities.com article.

Written by Jason Oliva

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