Three Benefits of a Reverse Mortgage in Today's Market
A reverse mortgage (also called a "home equity conversion mortgage" or "HECM") is a mortgage loan made by a private lending institution such as a bank, credit union, or mortgage company. The loan is insured by the Federal Housing Administration (FHA), which is a division of the US government. You are not required to make monthly mortgage payments. Any interest you owe is added to your loan amount. Here are three ways to benefit from a reverse mortgage, especially during times of economic uncertainty:
SEQUENCING OF DISTRIBUTIONS.
The order in which you take distributions from your retirement account has a very significant impact on how long your retirement assets will last. A reverse mortgage line of credit can supplement your income in the years when you take a reduced distribution from your retirement account. This could preserve your assets for a longer period of time, and give you more flexibility as the market fluctuates.
PRESERVE ASSETS AND IMPROVE CASH FLOW.
A reverse mortgage line of credit can be used to preserve assets, improve cash flow, and pay for large expenses instead of liquidating your investments in a fluctuating market. You can use the funds for virtually any purpose:
- Buy a new home or car without worrying about monthly payments
- Pay off an existing mortgage or other debts and eliminate those monthly payments
- Pay for in-home care for yourself or a loved one
- Delay social security so you can get your full benefits
- Go on a dream vacation or create experiences that would otherwise not be possible
HEDGE AGAINST INFLATION.
A reverse mortgage line of credit can be used to supplement your income as inflation erodes the purchasing power of your other sources of income. You can also use the funds for investment purposes. While a reverse mortgage is generally only available on your primary residence, the funds can be used to purchase rental properties or other investments that grow or produce income.
You must be at least 62 years old to qualify for a reverse mortgage. The loan amount is calculated based on your age and home value.
Source: Momentifi