A reverse mortgage is a complicated lending tool. You will want to speak to a reverse mortgage lender to make sure this type of financing is best for you. If it makes good financial sense, here are 4 ways a reverse mortgage can change your life for the better!

1. End monthly mortgage payments

If you have a small mortgage remaining on your home, you can use a reverse mortgage to pay it in full, thus ending monthly mortgage payments. There is no requirement to make monthly mortgage payments on a reverse mortgage. A reverse mortgage does not have to be repaid until the homeowner no longer occupies the home as a primary residence.

2. Pay off debts to improve monthly cash-flow

If you are struggling to pay credit card debt, an auto loan, medical bills, or some other recurring payment, you can use a reverse mortgage to pay off those debts. Paying off the debts an dramatically improve your cash flow. Extra money in your pocket each month can mean the difference between struggling to get by and being free to go out to dinner whenever you want.

3. Save your home from foreclosure

Believe it or not, a reverse mortgage does not require a minimum credit score or proof of income. You can actually have terrible credit (with the exception of an open bankruptcy), zero income, and still be approved. If you are no longer able to make your house payment, and find yourself in danger of foreclosure, it is possible a reverse mortgage can save your home.

4. Purchase a new home using a reverse mortgage

Here is a typical example of how a person can use a reverse mortgage to buy a home. Let's say you own your home free and clear but would like to downsize. If you receive $400,000 from the sale of your home, you could use it to buy a new home but then you'd have no money left over. Or, you could take $200,000 toward the purchase of a $400,000 home and a reverse mortgage for the rest. You still have $200,000 from the sale and you have a $400,000 home -- yet you also have no monthly mortgage payments.

Renee Morgan

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