When working longer may not be an option, and reducing spending becomes easier said than done, there are several ways retirees can stretch their savings—one of which can be using a reverse mortgage, says a recent article from The Dallas Morning News.
“Reverse mortgages were long viewed as a last resort, and, in many cases, they still are,” the article states. “But that perception is starting to change as people are living longer, which means more retirees will have to tap the money locked inside their home at some point.”
The article spotlights the use of a standby reverse mortgage, which can allow borrowers to open a line of credit that can be tapped when they need it.
Citing John Salter, associate professor of personal financial planning at Texas Tech University, The Dallas Morning News states that opening a credit line while interest rates are low—even if the borrower does not need the money now—can result in a larger credit line now than when rates are higher.
The article also describes the differences between a reverse mortgage line of credit and a traditional home equity line of credit, suggesting that the latter instrument may work if the homeowner expects to move within a few years and downsize.
Read The Dallas Morning News article.
Written by Jason Oliva