Not all retirees want to downsize in retirement. But for those who would rather ‘upsize’ to a larger or more expensive home, a reverse mortgage can help, explains a recent article from CBS News.
If seniors have a significant amount of home equity in their current home, they could combine that asset with a reverse mortgage to purchase a more expensive home without having to take on a monthly mortgage payment, the article explains. A reverse mortgage for purchase can be a huge help for homeowners who want to move, but plan to stay in their next home for a while.
“The reverse mortgage loan doesn’t need to be repaid until they sell the new home, pass away or move out, providing all other loan obligations are met, such as property taxes, insurance and maintenance,” says the article.
One thing that borrowers should consider before jumping right in is the amount of money that needs to be paid upon closing the loan. Total up-front closing costs can add up to be thousands of dollars, so making sure that the homeowners are aware that these fees will be taken out of their overall lending limit is vital.
The article points out that the reverse mortgage for purchase isn’t right for every homeowner, but there are many other uses for a reverse mortgage, such as generating regular monthly cash flow or taking out the line of credit option to have as an emergency fund.
Americans have almost as much home equity as they have in their retirement savings, so looking at ways to strategically tap into it can be a “common sense” way to extend retirement savings.
Read the full article on CBS News.
Written by Alana Stramowski