Unlock Retirement Bliss with a Reverse Mortgage
After years of scrimping, saving, and waiting, it’s finally time to retire. But with the recent wild swings of the stock market, will you have enough in your retirement account to spend your golden years the way you intended?
Fortunately, if you own a home in Charlotte, North Carolina, or the surrounding areas, you may have accumulated a good bit of home equity. If you’re worried about enjoying your retirement, don’t forget about this little-known tip: you can get the funds you need by tapping the equity in your home with a reverse mortgage. Learn more about reverse mortgages, how they work, and what you need to know to kick-start the retirement you’ve dreamed of.
Understanding reverse mortgage loans
A reverse mortgage is like a home loan in reverse – instead of you paying the bank, the bank pays you.
Reverse mortgage loans are specifically designed for homeowners over the age of 62, and the most common type is called a Home Equity Conversion Mortgage (HECM). With this kind of loan, much like with a home equity loan, you use the equity in your home to access cash.
But unlike with a home equity loan, you don’t repay the mortgage in monthly payments. Instead, you’ll repay the loan all at once when the loan sells.
Key benefits of reverse mortgage loans
Reverse mortgage loans let you access all that untapped equity in your home while still living in it. Your name remains on the title, and you don’t have to worry about selling.
With the proceeds from a reverse mortgage, you can supplement your retirement income. You can get the cash you need to travel, spoil your grandchildren, or even just pay bills. The enhanced cash flow can be used for whatever you need, from necessities to the treats and activities that make life worth living.
You can use a reverse mortgage for:
- Daily living expenses
- Home upgrades and repairs
- Travel and vacations
- Debt consolidation
- Medical bills and expenses
- Assistance for family members
For retirees living on a fixed income, a reverse mortgage can be a lifesaver, delivering a cash infusion from an asset you already own, without requiring you to move to a different home.
By tapping the home equity you’ve already built, you get to stay in your own home and the neighborhood you love, allowing you to age in place comfortably and pay for premium care if you need it.
The flexibility and peace of mind of having a financial cushion for the unexpected will make your retirement relaxed and enjoyable.
What to keep in mind
There are a few cautions and considerations to keep in mind when you’re exploring whether to get a reverse mortgage. First and foremost, be aware that interest will be added to your loan balance as time goes on. The longer you wait to sell, the more interest will be added. In this regard, a reverse mortgage is unlike other kinds of loans, because your balance will grow instead of shrink over time.
You will need to remain in the home as your principal residence in order to use a reverse mortgage. That means if you plan to move to another residence, such as downsizing to a smaller home or apartment or moving to assisted living, a reverse mortgage might not be right for you.
Also keep in mind that you will be responsible for keeping your home in good condition, which includes regular maintenance and repairs. If you can’t tackle these projects yourself, you’ll need to hire someone to help you.
Finally, don’t forget that you’ll still need to pay homeowners insurance and property taxes. Depending on your home and its size and location, these costs could still be a challenge for some retirees.
When you’re ready to sell the home, then you’ll repay the loan with the proceeds of the sale.
Is a reverse mortgage right for you?
Before you decide whether a reverse mortgage is the right fit for your retirement, consider your current financial situation. A HECM could be the right fit if you are age 62 or older and plan to remain in your home for a number of years.
You’ll want to ensure you have sufficient equity in your home to borrow against. Your loan will also be influenced by factors such as your age, location, value of the home, and interest rates.
Don’t forget to run the numbers on the long-term effects of borrowing against your home equity, and make sure the math works favorably for your situation.
It’s a good idea to consult a financial advisor or trusted expert when you’re considering a reverse mortgage. The mortgage specialists at Fairway of the Carolinas are experienced mortgage experts who can help you decide whether this type of loan is right for you. Contact us today to get in touch with a mortgage planner — and you can start dreaming of your own unique retirement bliss.