In the United States, ten thousand baby boomers retire every day. If you’re nearing retirement and haven’t quite saved enough, a reverse mortgage for seniors is a viable option for retirement income. Whether you underestimated your life expectancy, saved less than you should have, or had to deal with surprise healthcare costs, there are a number of reasons you might not be as financially prepared for retirement as you hoped you’d be. From being able to defer Social Security benefits to providing a larger inheritance to your heirs, here are four ways reverse mortgages for seniors make sense.
Deferred Social Security Benefits
Did you know that Social Security benefits increase between six and eight percent a year between the ages of 62 and 70? It’s for this reason that many financial planners recommend that their clients delay claiming their benefits for as long as they can. If you want to defer your Social Security benefits for as long as possible, but are worried about your finances in the meantime, setting up a reverse mortgage with a term payout that lasts eight years is one thing to consider. This way, you’ll be receiving monthly payouts that’ll hold you over until you start receiving your monthly Social Security payments. And, depending on the value of your home and the terms of your reverse mortgage loan, your payouts could potentially replace all the income Social Security would have provided.
Make Improvements to Your Home
Living in the same home for an extended amount of time comes with its own set of issues. As your home ages, things fall apart and need replacing. If you need to make some modifications to make it easier to stay in your home, but your best source of cash is tied up in the house itself, opening a line of credit through a Home Equity Conversion Mortgage (HECM) may be your best bet. Even if you have 401(k) assets available, you may not want to use those for home repairs or remodeling. Whether you need to make your bathroom more accessible or make some much-needed improvements to your kitchen or HVAC system, speak with a HomeBridge Mortgage Loan Originator today about reverse mortgage for seniors.
Provide Larger Inheritances
Most people think that the upfront costs and compounding interest in a reverse mortgage would significantly reduce any inheritance they plan to leave their heirs, but this isn’t always the case. Upfront costs consist of closing costs, a mortgage insurance premium, and origination fees―most of which can be wrapped into the loan itself. While these costs vary, consider that the home is a single, undiversified asset, and that using the home to create retirement income, instead of a diversified investment portfolio of stocks, could lead to a higher overall inheritance. It does require a certain level of expertise to make this work for you, so speak with your financial planner and a HomeBridge Mortgage Loan Originator for advice about how a reverse mortgage for seniors can benefit you and your specific financial situation. They’ll be able to tell you about the eligibility requirements for reverse mortgages, too.
Gives You the Freedom to Retire
One of the main benefits of reverse mortgages for seniors is that they help those who are house-rich and cash-poor to retire and stay in their home for as long as they’d like. Since some seniors depend on that extra few hundred dollars a week to meet household expenses, the need for cash sometimes keeps seniors in the workplace into their 70s and beyond. If this sounds like you, a reverse mortgage loan could provide you with the extra money you rely on each month while possibly eliminating the necessity of working. Whether it’s you or a spouse or partner who is still working, everyone “deserves” to enjoy their retirement without having to sell their home, and a reverse mortgage for seniors can help.
Extra Funds for Unexpected Expenses
Finally, you’re sure to run into unexpected expenses throughout the course of your retirement years. An injury or sickness might require long-term care, or you or your spouse could eventually need in-home medical care. Having access to a reverse mortgage line of credit could give you the peace of mind you need to handle unexpected medical expenses.
As always, reach out to a HomeBridge Mortgage Loan Originator for more information on reverse mortgages for seniors.