Not Everyone is the Best Candidate for a Reverse Mortgage Loan
Is taking out a reverse mortgage loan a bad idea? That depends on who you ask.
According to Wade Pfau, PhD, CFA, RICP, a professor at the American College for Financial Services and founder of RetirementResearcher.com, “Reverse mortgages are not inherently a bad idea, though they are often misunderstood and not used in a most beneficial way.”
A reverse mortgage frees up cash by giving you access to your home equity as a lump sum, monthly payments or a line of credit that’s there if and when you need it to comfortably age in place. Borrowers who elect a fixed rate loan will receive a single disbursement lump sum payment. Other payment options are available only for adjustable rate mortgages. Your local loan specialist, Reverse Mortgage Funding LLC (RMF), can tell you more when you call (888) 277-1567.
Consider this: Any mortgage is a bad idea if you can’t keep up with your loan obligations. It’s also not a smart decision if you’re planning to spend the funds on an extravagant lifestyle or a risky investment. Here are several more reasons why a reverse mortgage may not be right for you:
You don’t own your home. You must be a homeowner (or homebuyer) to qualify. If you don’t own your home, a reverse mortgage won’t be able to aid your financial plan for retirement.
You don’t meet the age requirement. This is the rare occasion you may find yourself wishing you were a few years older! Age is among the biggest potential considerations for a reverse mortgage. To qualify for a traditional reverse mortgage, all borrowers on the home’s title must be at least 62 years of age. But a newer loan option available in certain states, an Equity Elite Reverse Mortgage, is available to borrowers as young as age 55*.
*Available to borrowers as young as 55 in select states only. Higher minimum age requirements may apply. Visit www.reversefunding.com/equity-elite for details.
You don’t plan on having cash flow issues…ever. Your current financial situation may be stable now, but this stability is not guaranteed for the years ahead. A reverse mortgage can be used to turn part of the equity in your home into funds you can use to pay bills, cover medical costs and so much more. If you don’t foresee having any cash flow issues now or in the future, a reverse mortgage may not be necessary.
You don’t need a standby line of credit. We all know that life happens: unplanned medical bills, unexpected car repairs, unforeseen home repair expenses. Do you have enough savings to handle unexpected expenses? Establishing a line of credit that you can tap into as needed is not a bad idea to help alleviate financial worry and gain peace of mind. By having the funds from a reverse mortgage line of credit available, you may avoid having to sell stocks or other assets — so you can hold onto productive investments and continue to collect interest or dividends. As with any mortgage, you must meet your loan obligations, keep current with property taxes, insurance, and maintenance.
You don’t need financial flexibility. If you prefer to make monthly payments, a reverse mortgage might not be right for you. Unlike a traditional home loan or line of credit, a reverse mortgage does have a flexible repayment feature: You can pay as much or as little as you like toward the principal and interest each month, or defer repayment — it’s strictly up to you, as long as you remain in good standing with your loan (keeping current with property taxes, insurance, and maintenance).
Is it a good idea for you?
Whether or not you need the funds now, you can gain peace of mind knowing the money is there. Evaluate your options and learn more about how a reverse mortgage loan can help you retire more freely.
This content is sponsored by RMF, one of the nation’s leading reverse mortgage lenders. We are dedicated to helping older Americans live the retirement lifestyles that they imagined and deserve, in the comfort of their own homes. As a result of our commitment to providing an extraordinary and positive customer experience, we have earned a 98% customer satisfaction rating; a 5-star / Excellent score on Trustpilot; 4.5 out of 5 stars on LendingTree; and an A+ rating with the Better Business Bureau. Call (888) 277-1567 to speak with one of our experienced reverse mortgage specialists to learn about our retirement financing products and solutions.