CBS News: Reverse Mortgages Help Seniors ‘Upsize’ in Retirement

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.

Advertisement

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

Join the Conversation (3)

see all

This is a professional community. Please use discretion when posting a comment.

  • The article by CBS news is a decent one but a bit on the weak side, especially explaining the HECM for purchase program (H4P).

    The good part of the article is talking about seniors buying up, which in my opinion is an option not talked about that much. However, the percentage of seniors wanting a larger more expensive home when it comes to retirement is very low in comparison to down sizing!

    I think when the article talks about a reverse mortgage does not need to be paid off under certain circumstances, one of them says “Pay away”, I am sure Alana meant to say “Pass Away”.

    As far as the costs involved in a reverse mortgage, sure there are costs. However, one has to measure the amount of equity they have in their existing home and if it is a very sizable amount, when they purchase another home and the closing costs are rolled in, the costs don’t become the major deterrent. Especially when our seniors wind up with no more monthly mortgage payments and no actual cash out of their pockets. It all comes down to, equity build up traded for a better quality of life!

    John A. Smaldone
    http://www.hanover-financial.com

    • John,

      The quality of life issue is a subjective measurement that none of us are responsible for. The measurable and benefit borrowers get is cash. That is what we provide. How the borrower uses those funds has much to do with any improvement in their quality of life.

      Only by prudence and superior choices will the lives of these borrowers improve for the better. We provide the fuel to empower those choices for the better.

  • Sometimes, misquotes like the following bring a smile: “‘The reverse mortgage loan doesn’t need to be repaid until they sell the new home, pay away or move out,'” (sic). Rather than “pay”, the article says “‘pass.'”

    The following is an interesting statement but few prospects are not aware that financed upfront costs reduce the principal limit available to them since they are being told the approximate amount of the down payment when “upsizing.”

string(105) "https://reversemortgagedaily.com/2016/09/01/cbs-news-reverse-mortgages-help-seniors-upsize-in-retirement/"

Share your opinion

[wpli_login_link redirect="https://reversemortgagedaily.com/2016/09/01/cbs-news-reverse-mortgages-help-seniors-upsize-in-retirement/"]