One of the most appealing features of a reverse mortgage is that you can use the money you get for any purpose. Although many people use reverse mortgages to help pay their regular household bills or medical costs, some affluent homeowners are using the proceeds to purchase or repair second homes.

Using Reverse Mortgages to Purchase Second Homes
It’s definitely a buyers market out there since home values have fallen so much. So some folks who are already well-off financially, are looking for real-estate bargains. Instead of financing their purchases with a a conventional mortgage, some folks over 62 are using reverse loans to purchase distressed properties, according to an article in the Norwich Bulletin. This seems to be happening especially in the Sunbelt.

Reverse Mortgages and Estate Planning
According to the article, buying a second home is just one way to use reverse mortgages for estate planning. Reverse loans can also be used:

—To give gifts, which could reduce your estate and death taxes
—Purchase life insurance in an irrevocable trust
—Purchase long-term care insurance

Use Caution with Reverse Mortgages
Homeowners should consult a knowledgeable estate-planning attorney or financial planner before attempting to use a reverse mortgage. Even wealthy seniors should do their homework before attempting to use a reverse mortgage this way. It’s important to make sure you have enough income to manage your expenses before getting into using a reverse mortgage for estate planning. You can compare reverse mortgages here.

Many people who were considered to be extremely wealthy have been hit hard during this recession, leaving them with less retirement savings than they expected. Unexpected medical expenses also can seriously impact the finances of people of all income levels. And last, property values have declined so much that people who own more expensive homes may want to wait until their equity begins to rise again so they’ll get a larger payout on a reverse mortgage.

This entry was posted on Wednesday, August 12th, 2009 at 9:16 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.