Are Reverse Mortgages a Good Idea?

1. Reduce financial stress in your retirement years

A reverse mortgage is a wonderful option for those who have experienced challenges through life that prevented them from being able to save for retirement. You used your hard-earned money wisely and were able to purchase a home years ago, and today, because you were as frugal as possible through the years, you now have substantial, untapped equity in your home. Why not convert a portion of that equity into cash that you can use for whatever need you deem necessary?

2. You can remain at home and don’t have to move

A reverse mortgage is perfect for individuals who don’t have much money saved or invested but A reverse mortgage allows you to stay in your current home rather than moving and searching for a new, more affordable property. While a reverse mortgage has an expense, it may be less expensive to obtain a reverse mortgage than to relocate and either purchase another house or rent elsewhere.

3. The existing mortgage will be paid off

You don’t need your home to be paid off to get a reverse mortgage. You may actually apply the proceeds from a reverse mortgage to your outstanding mortgage balance. As a result, funds can be spent on other expenses.

4. Taxes don’t apply to your reverse mortgage income

In the eyes of the IRS, a reverse mortgage payment is considered a loan advancement rather than an income. As a result, the cash is not taxed, unlike other retirement income such as 401(k) or IRA distributions.

5. If the balance exceeds your home’s value, you’re protected

Homeowners are protected If the loan balance exceeds your home’s value
Mortgage Insurance Premium (MIP) is part of your closing costs. There is an initial and annual amount charged by the lender, which is paid to FHA. MIP is in “addition” to the homeowners insurance which must be maintained by the homeowner. A reverse mortgage is a non-recourse loan.