Due to the often-cited impending “silver tsunami” of incoming American retirees and metrics which suggest that retirement savings are stagnating, the amount of seniors looking for alternative ways to supplement their cash flow in their post-working years shows signs of accelerating, and one possible way forward for seniors in the right situation could be with a reverse mortgage.
This is according to an article published by Harlem World Magazine, which details four specific signs that could indicate why a reverse mortgage may be a good idea worthy of consideration for seniors in a few particular kinds of financial situations at or near retirement.
The first of the four signs is if a senior considers themselves “property rich but cash poor,” meaning that the amount of equity a senior has built up in their home meets or exceeds the amount of cash they have on-hand.
“Unfortunately, they are often rich in name only,” the article says. “They would have to sell their property to benefit from the massive appreciation and value. They might still struggle to come up with the cash that they need to pay their bills regularly. In some cases, it might feel that the increase in property value is actually an inconvenience because you have to pay more on property taxes and insurance.”
A reverse mortgage can offer such seniors an option to extract some of that equity out of the home in the form of the loan’s proceeds, while also letting them remain in the home without the need to sell the property.
“You can get a lot of money with your reverse mortgage if you have a valuable house that is paid off and don’t intend on selling it in the near future,” it says.
The other two titular “signs” a reverse mortgage might be a good idea are if a senior doesn’t mind having a continued need to pay property taxes and homeowners’ insurance; as well as having plans to remain in the existing home for a long while to come or for the rest of life.
“You will need to pay back your reverse mortgage if you ever sell your home,” the article says. “This means that you have to make sure that you really want to live in it for the rest of your life. If you are planning on relocating because you don’t like the weather or want to be closer to your kids, then you should forgo taking out a reverse mortgage on your current property. However, you can always buy a new property outright and take out a reverse mortgage on it.”
The final of the four “signs” includes having heirs that may not mind having a smaller inheritance than they otherwise would have if the property owner decided not to get a reverse mortgage, the article says.
“If there is remaining equity, your children or other heirs inheriting your estate will either need to sell the home and collect a smaller share of the equity or pay off the reverse mortgage before they can get the deed to the home,” the article says. “You need to have a discussion with them and make sure that they are on the same page. Explain what a reverse mortgage is and make sure they understand.”
Read the article at Harlem World Magazine.