If you have not considered the benefits of reverse mortgages, here's some food for thought. New rules have changed the game altogether, protecting borrowers more than ever before.
For example, the amount of money that you can take out during the first 12 months is limited. Spouses who are under the qualifying age of 62 during the origination of the loan can now remain in the home if the borrowing spouse dies, as long as they maintain the home and pay the property taxes and insurance. What's more, the associated fees have been lowered and the mortgage insurance premiums are less costly, making these HECM loans more advantageous.
The primary benefit of a reverse mortgage is that it allows a retiree to access the equity in their home, essentially converting it into a financial vehicle they can use at their discretion. For instance, a reverse mortgage line of credit could be tapped to help pay for unforeseen medical bills that might otherwise put a family out of house and home.
Furthermore, you don't have to spend the money just because you have access to it. A line of credit only accrues interest when you spend it, and only on the money that you are spending. But what it does do is create a nest egg that you can access when and if you need it or deem fit. In addition, any money that you pull out is considered a loan, and therefore is not taxable under income tax laws.
Of the many reasons to consider a reverse mortgage, it's nice to know that you have a line of credit that you can access at any time, for any reason, whenever you need it. Being able to borrow against an asset such as your home at the push of a button or the flick of a pen can add some comfort and security to your life.
Before you consider a reverse mortgage, make sure you fully research the process, fees and interest rates. Don't forget, these loans are not based upon your credit or income, so they are much easier to qualify for than a conventional loan is. Your research may lead you to determine that they make sense for your situation.