Using Reverse Loans to Fund Retirement

For some seniors, getting a reverse home mortgage is viewed as a way to get out of debt, pay medical costs, or fix up their homes. There are pros and cons of reverse mortgages when it comes to paying for retirement expenses. Let’s take a look at a few of them.

Home Equity Ups and Downs

About a quarter of U.S. homeowners are under water, owing more on their mortgages than their homes are worth. Even if you still have a healthy amount of equity in your home, take a look at your neighborhood to see where housing values are headed. There have been signs that the real estate market may be starting to improve in some areas, but you may not be out of the woods yet. Taking out a reverse loan at the wrong time would be a mistake, because you’d have access to a lot less money.

If you think your equity may continue dropping, getting a reverse mortgage now may allow you to convert some of it to cash before you lose more value. Think your home equity may rise? Then wait for the market to improve before applying for a reverse mortgage. If you’re set on getting a reverse loan at this time, consider sprucing up the place to improve your property value.

Reverse Mortgage Stimulus

A reverse mortgage could be your own personal stimulus package to help with financial hard times. Budgeted wisely, a reverse loan can allow you to live comfortably during your golden years. But borrowing money without a real plan and using it frivolously could put you in worse financial shape than when you started.

Getting Counseling

If you want to borrow money with your spouse, make sure you both grasp reverse mortgage guidelines to avoid any misunderstandings later. Both of you need to meet with a reverse loan counselor to discuss any questions and concerns. You need to be on the same page to reap the benefits of borrowing money this way.

This entry was posted on Monday, March 29th, 2010 at 6:55 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.