Determining how to make use of your house in older age can be a big decision for anyone at or near retirement, especially if a senior is determining whether or not they want to remain there. There may be questions about whether or not the current house is the right one for them and their circumstances, whether or not downsizing is a viable option, or whether or not the equity in the home should be converted into spendable cash.
When making the decision about how to leverage a house during retirement, a reverse mortgage could present a “viable option” in the right circumstances. This is according to a new column published this week by the Los Angeles Times.
Since the house can often serve as a senior’s primary asset holding the largest share of their wealth headed into retirement, making a determination about how and when to stop working may hinge on whether or not a senior is still making payments on a forward, traditional mortgage according to a financial planner who spoke with the L.A. Times.
“Yet other experts say that having a mortgage isn’t a deal-breaker for retirement, especially if the interest rate is low,” the column reads. “The real priority should be getting rid of your consumer debt, such as credit card balances,” according to input from a Certified Public Accountant (CPA) for the story.
Yet another question to ask concerns how much house is appropriate for certain individuals, the column explains.
“Downsizing to a smaller home could free up cash to add to your retirement savings, noted Jason Stein, a certified financial planner in Irvine,” the column reads. “If you want to generate real savings, though, you’ll probably have to move far from California’s hot real estate markets,” Stein advised.
This is where a reverse mortgage could potentially enter the picture, the column says.
“[E]xperts say that taking out a reverse mortgage — that is, borrowing against the equity in your home, with the loan repaid when the house is sold or bequeathed — can be a viable option in some limited circumstances,” the column reads. “One drawback of these loans, though, is that the revenue they generate may not last as long as you do. Your home’s value is finite, after all.”
Recently, syndicated columnist Liz Weston’s work has been appearing in the same publication offering that reverse mortgages could be a potential solution to retirement issues.
Read the column at the Los Angeles Times.