Many seniors in America have a justified fear of outliving their savings, and these anxieties have only grown more fierce as inflation has steadily increased in recent years.
Between March and April of this year alone, the consumer price index increased 0.8%, but it was even more startling that it jumped over 4% from last year. A surge like that hasn’t occurred in nearly 14 years.
This can be frightening to those living on a fixed income, such as retirees. After all, there are only so many methods for preserving purchasing power. But, financial experts say that reverse mortgages once thought of as a last resort, are fantastic additions to any retirement plan and offer the benefit of inflation protection.
Most times, retirees will opt to preserve home equity and live off their investment portfolios, but experts concur that is not necessarily the best choice. After all, having an alternative cash flow source gives seniors a great advantage, even if they are already considered wealthy.
For instance, with a reverse mortgage, you will still have money on hand while allowing your portfolio to grow, so it can adequately finance your future. This is why choosing a reverse mortgage during your early retirement years is best and relying on other assets later on.
Could you qualify for a reverse mortgage?
Anyone who owns their own home, at least 62 years old, may qualify for a reverse mortgage. It converts the equity you have accrued in your home into cash since you will be using it as collateral to borrow against.
The best part is that as long as you live in your home and still own it, you will not have to repay the loan during your lifetime. That is why it is a stellar option for increasing cash flow during retirement without worrying about making monthly loan payments.
How and when does the loan get paid?
The reverse mortgage will become due only when the home no longer remains your primary residence or the last borrower or Non Borrowing spouse has passed away.
When either occurs, there are three options for repayment:
- You or your heirs can sell the property and repay the loan.
- You or your heirs can refinance the loan and keep the property
You nor your heirs are not responsible for the payoff if the home cannot sell for enough to satisfy the complete balance.
How will you be compensated?
You can choose a lump sum, a stream of monthly payments, a credit line, or any combination. With the credit line, you will be offered the total amount of available equity in credit so you can borrow what you need when you need it. The best part about the credit line option is that the unused funds will increase, a natural growth built into this option, so more money will be available over time.
Should reverse mortgages be a proactive retirement strategy?
Definitely! Why would anyone wait until they have exhausted all other options before accessing funds right at their fingertips?
At America’s Mortgage Resource, we make it our mission to give older homeowners a proven method for financing their retirement and to provide them with the opportunity to gain additional cash flow for their everyday needs. We care deeply for our borrowers’ needs and want to ensure their freedom from financial worries so they can enjoy their golden years.