Reverse Mortgages and Credit Cards

You may be looking for a way to get your hands on some cash to help pay for your expenses. While boosting your regular income through employment is usually the best way to improve your cash flow, that isn’t always possible, especially in this tough job market. If times are tough, you may find yourself borrowing money to meet your needs.

Borrowing money should not be your first choice when trying to boost your income. However, if you are facing this choice, consider pros and cons of two popular methods of borrowing that are popular with seniors: reverse loans and credit cards.

Reverse Mortgages Pros and Cons

Reverse mortgages allow you to convert the equity in your home into cash. The money is paid out as lump sum, through installments, or as a line of credit. On the plus side you don’t have to repay the money until you leave your home and you can spend it however you want. Drawbacks to reverse loans are that the fees can be steep and you could end up outliving the proceeds, depending upon how you manage the money. You also must be at least 62 to apply for a reverse loan.

Credit Cards

It’s likely that you already have a credit card, and you may receive offers for cash advances and balance transfers at low introductory rates. While credit cards are easy to use, they aren’t always easy to pay back. Most credit cards have high interest rates, and your balance can rise quickly if you don’t pay it off each month. Also, credit cards automatically jump to the default rate if you are late with payments. Tack on late fees and you could find yourself struggling to keep up with credit card bills, especially if you are on a fixed income.

Reverse Mortgage Counseling

Before choosing to apply for a reverse home mortgage or use credit cards to take care of your expenses, talk with a housing counselor to discuss your situation. Borrowing money may not be the solution, so it’s important to find out what alternatives are available so you can choose the right path to improve your financial situation.

This entry was posted on Monday, August 9th, 2010 at 6:12 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.